TY  - BOOK
AU  - Brauning,Falk
AU  - Ivashina,Victoria
ED  - National Bureau of Economic Research.
TI  - Monetary Policy and Global Banking
T2  - NBER working paper series
PY  - 2017///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - April 2017; Hardcopy version available to institutional subscribers
N2  - When central banks adjust interest rates, the opportunity cost of lending in local currency changes, but--in absence of frictions--there is no spillover effect to lending in other currencies. However, when equity capital is limited, global banks must benchmark domestic and foreign lending opportunities. We show that, in equilibrium, the marginal return on foreign lending is affected by the interest rate differential, with lower domestic rates leading to an increase in local lending, at the expense of a reduction in foreign lending. We test our prediction in the context of changes in interest rates in six major currency areas
UR  - https://www.nber.org/papers/w23316
UR  - http://dx.doi.org/10.3386/w23316
ER  -