Global Imbalances and Bank Risk-Taking

Konferenzbeitrag

Financial crises are usually preceded by large current account deficits. However, the channel through which international capital flows affect financial stability is hardly identified, yet. In this paper, we study the impact of current account balances on bank risk-taking making use of the exogenous and huge variation in capital flows within the euro area between the years 2001 and 2012. We find that bank risk-taking is positively associated with current account deficits. We provide a series of tests showing that this is the case both because banks in countries with large external deficits substitute new investments in asset markets (e.g. sovereign debt) with loans that are typically riskier and because the average quality of bank loans deteriorates.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Credit and Liquidity Risks in Financially Integrated Markets: Policy Implications and Real Effects ; No. A02-V2

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Current Account Adjustment; Short-term Capital Movements ; Open Economy Macroeconomics ; Financial Crises

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): te Kaat, Daniel Marcel ; Dinger, Valeriya
• Ereignis: Veröffentlichung
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/112866
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ