Cross-border Transmission of Emergency Liquidity
Thomas Kick, Michael Koetter, Manuela Storz
Journal of Banking & Finance,
forthcoming
Abstract
We show that emergency liquidity provision by the Federal Reserve transmitted to non-U.S. banking markets. Based on manually collected holding company structures, we identify banks in Germany with access to U.S. facilities. Using detailed interest rate data reported to the German central bank, we compare lending and borrowing rates of banks with and without such access. U.S. liquidity shocks cause a significant decrease in the short-term funding costs of the average German bank with access. This reduction is mitigated for banks with more vulnerable balance sheets prior to the inception of emergency liquidity. We also find a significant pass-through in terms of lower corporate credit rates charged for banks with the lowest pre-crisis leverage, US-dollar funding needs, and liquidity buffers. Spillover effects from U.S. emergency liquidity provision are generally confined to short-term rates.
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12.02.2020 • 2/2020
Causes of populism: IWH begins international research project
Is the increasing strength of populist parties due to economic causes? The Halle Institute for Economic Research (IWH) is set to play a leading role in scrutinising this controversial question with immediate effect, together with researchers from England, Scotland and the Czech Republic. The Volkswagen Foundation is funding this interdisciplinary project to the tune of almost one million euro for four years.
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12.12.2019 • 24/2019
Global economy slowly gains momentum – but Germany still stuck in a downturn
In 2020, the global economy is likely to benefit from the recent thaw in trade disputes. Germany’s manufacturing sector, however, will recover only slowly. “In 2020, the German economy will probably grow at a rate of 1.1%, and adjusted for the unusually high number of working days the growth rate will only be 0.7%”, says Oliver Holtemöller, head of the Department Macroeconomics and vice president at Halle Institute for Economic Research (IWH). With an estimated growth rate of 1.3%, production in East Germany will outpace total German production growth.
Oliver Holtemöller
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19.09.2019 • 19/2019
Long-term effects of privatisation in eastern Germany: award-winning US economist begins large-scale research project at the IWH
It is one of the most prestigious awards in the German scientific community: the Max Planck-Humboldt Research Award 2019 endowed with €1.5 million goes to Ufuk Akcigit, Professor of Economics at the University of Chicago. At the Halle Institute for Economic Research (IWH), Akcigit aims to use innovative methods to investigate why the economy in eastern Germany is still lagging behind that in western Germany – and what role the privatisation process 30 years ago played in this.
Reint E. Gropp
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05.09.2019 • 18/2019
Downturn in Germany continues
Trade disputes are causing international trade in goods to decline this year. The manufacturing industry in Germany is particularly affected by this. However, a robust labour market is supporting the economy. According to IWH autumn economic forecast, German gross domestic product (GDP) will increase by 0.5% in 2019. At 1%, output growth in East Germany is likely to be significantly higher than in West Germany.
Oliver Holtemöller
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Global Economy Gains Momentum – But Germany still Stuck in a Downturn In 2020, the global economy is likely to benefit...
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