Global Factors in Non-core Bank Funding and Exchange Rate Flexibility

Author:

Luís A. V. Catão, Jan Ditzen, Daniel Marcel te Kaat

Keyword:

Economics, General Economics, General Economics (econ.GN)

journal:

date:

2023-10-16 16:00:00

Abstract

We show that fluctuations in the ratio of non-core to core funding in the banking systems of advanced economies are driven by a handful of global factors of both real and financial natures, with country-specific factors playing no significant roles. Exchange rate flexibility helps insulate the non-core to core ratio from such global factors but only significantly so outside periods of major global financial disruptions, as in 2008-2009.

PDF: Global Factors in Non-core Bank Funding and Exchange Rate Flexibility.pdf