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The Dollar, Bank Leverage, and Deviations from Covered Interest Parity†

The Dollar, Bank Leverage, and Deviations from Covered Interest Parity† AbstractWe document a triangular relationship in that a stronger dollar goes hand in hand with larger deviations from covered interest parity (CIP) and contractions of cross-border bank lending in dollars. We argue that underpinning the triangle is the role of the dollar as a key barometer of risk-taking capacity in global capital markets. (JEL F23, F31, G15, G21) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review: Insights American Economic Association

The Dollar, Bank Leverage, and Deviations from Covered Interest Parity†

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References (31)

Publisher
American Economic Association
Copyright
Copyright © 2019 © American Economic Association
ISSN
2640-205X
eISSN
2640-2068
DOI
10.1257/aeri.20180322
Publisher site
See Article on Publisher Site

Abstract

AbstractWe document a triangular relationship in that a stronger dollar goes hand in hand with larger deviations from covered interest parity (CIP) and contractions of cross-border bank lending in dollars. We argue that underpinning the triangle is the role of the dollar as a key barometer of risk-taking capacity in global capital markets. (JEL F23, F31, G15, G21)

Journal

American Economic Review: InsightsAmerican Economic Association

Published: Sep 1, 2019

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