The Second Wave of Global Liquidity: Why Are Firms Acting Like Financial Intermediaries?

Recent work suggests non-financial firms have acted like financial intermediaries particularly in emerging economies. This paper corroborates these findings but then asks "why?" The results indicate evidence for carry-trade activities, but they are focused on countries with higher levels of capital controls, particular controls on inflows. There is little evidence for such activities given other potential motives. It is posited that this phenomenon is due more to the reaction of countries in the face of low global interest rates, quantitative easing and strong capital inflows than incomplete markets or the retreat of global banks due to impaired balance sheets or tighter regulations.

Bibliographic Details

Main Author:	Inter-American Development Bank
Other Authors:	Julián Caballero
Format:	Working Papers biblioteca
Language:	English
Published:	Inter-American Development Bank
Subjects:	Capital Control, Carry Trade, Financial Asset, Financial Bond, Interest Rate, Global Financial Crisis, Financial Risk, E51 - Money Supply • Credit • Money Multipliers, F30 - International Finance: General, F33 - International Monetary Arrangements and Institutions, financial intermediaries;interest rates;foreign currency bond issuance;financial asset,
Online Access:	http://dx.doi.org/10.18235/0011735 https://publications.iadb.org/en/second-wave-global-liquidity-why-are-firms-acting-financial-intermediaries
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