Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/201531
Authors: 
Kneer, Christiane
Raabe, Alexander
Year of Publication: 
2019
Series/Report no.: 
Working Paper 326
Abstract: 
This paper examines how UK banks channel capital inflows to the individual sectors of the domestic economy and to overseas residents. Information on the source country of foreign capital deposited with UK banks allows us to construct a novel Bartik instrument for capital inflows. Our results suggest that foreign funds boost bank lending to the domestic economy. This result is due to the positive effect of capital inflows on bank lending to non-financial firms and to other domestic financial institutions. Banks do not channel capital inflows directly to households or the public sector. Much of the foreign capital is also channeled back abroad, reflecting the role of the UK as a global financial center.
Subjects: 
capital flows
bank lending
credit allocation
international finance
instrumental variables
international financial linkages
JEL: 
F21
F30
F32
F34
G00
G21
Document Type: 
Working Paper
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