How to order
IMF Publications

Working Papers in full text
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All

Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile

Global Liquidity and Drivers of Cross-Border Bank Flows

Author/Editor: Eugenio Cerutti | Stijn Claessens | Lev Ratnovski
Authorized for Distribution: April 29, 2014
Electronic Access: Free Full Text (PDF file size is 1,602KB)
Use the free Adobe Acrobat Reader to view this PDF file.
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper provides a definition of global liquidity consistent with its meaning as the “ease of financing” in international financial markets. Using a longer time series and broader sample of countries than in previous studies, it identifies global factors driving cross-border bank flows, alongside country-specific factors. It confirms the explanatory power of US financial conditions, with flows decreasing in market volatility (VIX) and term premia, and increasing in bank leverage, growth in domestic credit and M2. A new finding is that similar variables for other systemic countries – the UK and the Euro Area – are also important, sometimes even more so, consistent with the dominant role of European banks in cross-border banking. Furthermore, recipient country characteristics are found to affect not only the level of country-specific flows, but also the cyclical impact of global liquidity, with sensitivities of flows to banks decreasing with stronger macroeconomic frameworks and better bank regulation, but less so for flows to non-financial firms.
Order a print copy
Series: Working Paper No. 14/69
Subject(s): International banking | Banks | Liquidity | Capital flows | Bank regulations | Bank supervision | Cross country analysis
    Published:   April 29, 2014        
    ISBN/ISSN:   9781475517729/1018-5941   Format:   Paper
    Stock No:   WPIEA2014069   Pages:   33
    Price:   US$18.00
Please address any questions about this title to