Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229103
Authors: 
Kaufmann, Christoph
Year of Publication: 
2020
Series/Report no.: 
ECB Working Paper No. 2489
Abstract: 
This paper studies the role of international investment funds in the transmission of global financial conditions to the euro area using structural Bayesian vector auto regressions. While cross-border banking sector capital flows receded significantly in the aftermath of the global financial crisis, portfolio flows of investors actively searching for yield on financial markets world-wide gained importance during the post-crisis "second phase of global liquidity" (Shin, 2013). The analysis presented in this paper shows that a loosening of US monetary policy leads to higher investment fund inflows to equities and debt globally. Focussing on the euro area, these inflows do not only imply elevated asset prices, but also coincide with increased debt and equity issuance. The findings demonstrate the growing importance of non-bank financial intermediation over the last decade and have important policy implications for monetary and financial stability.
Subjects: 
Monetary policy
international spillovers
capital flows
non-bank financial intermediation
JEL: 
F32
F42
G15
G23
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4406-9
Document Type: 
Working Paper

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