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 NON-TECHNICAL SUMMARYUnderstanding the origins of the various waves of the global financial crisis (especially the current European crisis) is a high priority for researchers and policy-makers. Such diagnostic work is essential both in designing policy solutions to resolve the current crisis and in improving preventive frameworks to mitigate the risk of future crises.Two In this paper, our main focus is on the relation between domestic credit growth and international capital flows for a sample of European countries. In particular, we focus on the EU27, plusNorway, Switzerland and Iceland. (Taken together, we label these countries as the E30 group.)Europe is an important testing ground for exploring the inter-relation between credit and capital flows, in view of the remarkable dispersion in domestic credit patterns during the pre-crisis period and the very high level of cross-border capital flows.Moreover, the large and persistent intra-European external imbalances provide an additional layer of complexity (Giavazzi and Spaventa 2010, Lane and Pels 2012). In particular, net capital ows and domestic credit growth have been separately identified as important sources of macroeconomic imbalances, such that it is highly relevant to understand any inter-connections between these variables. 3A major trend in European banking systems during the pre-crisis period was the divergence between domestic deposit growth and credit growth. In order to finance credit growth that was more rapid than deposit growth, banks raised funds by borrowing short term on international interbank and money markets and by issuing bonds. These shifts in bank funding patterns inEurope and the associated growth in cross-border bank-related financial flows are suggestive that a systematic relation might exist between international capital flows and domestic credit growth.The primary focus is on the E30 group over the period [2003][2004][2005][2006][2007][2008], although additional analysis is conducted on annual data for an extended sample of 54 countries for the period 1994-2008.Using these data we present stylised facts and run a series of OLS regressions to explain credit growth. As there may be two-way causality effects between domestic credit growth and international capital flows, we also report IV estimates, where international financial flows are instrumented by their lagged values.Our analysis confirms that the current account balance is a mis...

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 No 1952 / August 2016Note: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB Abstract This paper highlights a recent 'great moderation' in global capital flows, characterised by smaller volumes and lower volatility of cross-border transactions. However, there are substantial differences across countries and regions which we analyse by comparing the level of international capital flows observed in 2005-06, immediately prior to the onset of the global financial crisis, to the post-crisis period of 2013-14, when global flows arguably settled at a 'new normal'. We find that since the pre-crisis period, gross capital inflows recovered more for economies with smaller pre-crisis external and internal imbalances, lower per capita income, improving growth expectations, a less severe impact of the global financial crisis and less stringent macroprudential policy. On the asset side, countries with a more accommodative monetary policy, a milder impact of the crisis and oil exporters managed to increase gross capital outflows in the post-crisis period.

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Both academic researchers and policymakers posit a unique role for the US in the international financial system. This paper investigates the characteristics and determinants of US cross-border financial flows and examines how these contrast with those of the rest of the world. We analyse the relative importance of US, country-specific, and global variables as determinants of aggregate and bilateral US financial flows and as determinants of country-level cross-border financial flows excluding those directly involving the US. Our results indicate that variation in US variables -notably the VIX and US dollar exchange rate -has a quantitatively important influence on global financial flows, but mostly via US cross-border flows. Global and national risk indicators perform better in explaining "rest of the world" flows. Moreover, we find that the correlation between US and rest of the world flows peaks in periods of elevated uncertainty. We interpret our findings as evidence for the existence of a global financial cycle, only some of which is driven by policies and events in the US.

This paper examines whether the increased use of macroprudential policies since the global financial crisis has affected the impact of (euro area and foreign) monetary policy on mortgage lending in Ireland and the Netherlands, which are both small open economies in the euro area. Using bank-level data on domestic lending in both countries during the period 2003-2018, we find that restrictive euro area monetary policy shocks reduce the growth of mortgage lending. We find evidence that stricter domestic prudential regulation mitigates this effect in Ireland, but not so in the Netherlands. There is weak evidence for an international bank lending channel.