BoJ researcher finds need for heterogeneous response to credit flows
International propagation of shocks through global banks is "quantitatively important" but the optimal policy response to cross-border credit flows is different between countries, according to a working paper published today by the Bank of Japan.
What is the Major Determinant of Credit Flows through Cross-border Banking? by Toyoichiro Shirota, finds 36.4% of volatility in overall cross-border banking flows is due to a "global common factor", reflecting variables such as investors' risk appetite
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