ABS inflows to the United States and the global financial crisis

Bertaut, Carol C.; DeMarco, Laurie; Kamin, Steven B.; Tryon, Ralph W.

doi:10.1016/j.jinteco.2012.04.001

Cited by 59 publications

(82 citation statements)

References 20 publications

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“…See, for example, Bertaut et al (2011) and Bernanke et al (2011). As noted by the IMF (2012, p. 81): "Prior to the crisis, global current account imbalances encouraged safe asset purchases by official reserve managers and sovereign wealth funds."…”

Section: Modelmentioning

confidence: 99%

The Supply and Demand for Safe Assets

Gorton

Ordóñez

2013

SSRN Journal

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There is a demand for safe assets to use as collateral to back loans. Privatelyproduced collateral may be of different quality and if agents do not produce information about the quality, then even bad collateral can optimally be used to back loans, increasing output and consumption. But, if information is produced about the quality of privately-produced collateral, there is a crisis. The introduction of government debt alters the information environment, changing the incentives for private agents to produce information about collateral quality. Even a small amount of government debt can have a large effect. The economy is fragile to the extent that only privately-produced safe assets are relied upon.

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Section: Modelmentioning

confidence: 99%

The Supply and Demand for Safe Assets

Gorton

Ordóñez

2013

SSRN Journal

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“…Third, Germany saw a period of stable economic performance with a record-low level of unemployment until 2008 so that we do not have to worry about negative domestic demand effects at the beginning of the financial crisis. Fourth, some of the German banks had large exposure to the U.S. subprime market and were substantially hit by the financial crisis (see, e.g., Bertaut et al 2012). …”

Section: Introductionmentioning

confidence: 99%

From Financial to Real Economic Crisis: Evidence from Individual Firm-Bank Relationships in Germany

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. firms. For the analysis we match individual firm and bank financial statements in Germany using information about individual lending relationships. The data include small and medium sized firms. Using IV estimations in first differences to eliminate firm-and bank-specific effects, we find that banks which experience losses from their proprietary trading activities cut back lending, and firms whose relationship banks reduce lending decrease real investment. Terms of use: Documents inBank losses from proprietary trading during the crisis caused a decrease in the net real investment rate of their business customers by 20% through the reduction of credit supply, independent from demand effects. The effect is larger for firms unable to provide much collateral. We also document that firms can partially offset reduced credit supply by their relationship banks by resorting to self-financing and by establishing new bank relationships.

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“…We start with the first available stock observation which is for March 1999 and end the sample in December 2006 to avoid any effects stemming from the emergence of the first financial market tensions before the outburst of the global financial crisis 6 . The series is constructed by accumulating monthly flows, interpolating to monthly frequency the remaining non-flow stock variation (price and exchange rate variations and other adjustments) and adding it to the observed quarterly stocks.…”

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confidence: 99%

Capital inflows and euro area long-term interest rates

Carvalho

Fidora

2015

Journal of International Money and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractCapital flows into the euro area were particularly large in the mid-2000s and the share of foreign holdings of euro area securities increased substantially between the introduction of the euro and the outbreak of the global financial crisis. We show that the increase in foreign holdings of euro area bonds in this period is associated with a reduction of euro area long-term interest rates by about 1.55 percentage points, which is in line with previous studies that document a similar impact of foreign bond buying on US Treasury yields. These results are relevant both from a euro area and a global perspective, as they show that the phenomenon of lower long-term interest rates due to foreign bond buying is not exclusive to the United States and foreign inflows into euro area debt securities may have added to increased risk appetite and hunt-for-yield at the global level.JEL No: E43, E44, F21, F41, G15.

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ABS inflows to the United States and the global financial crisis

Cited by 59 publications

References 20 publications

The Supply and Demand for Safe Assets

The Supply and Demand for Safe Assets

From Financial to Real Economic Crisis: Evidence from Individual Firm-Bank Relationships in Germany

Capital inflows and euro area long-term interest rates

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