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Blowing the Bubble: The Global Funding of the Irish Credit Boom

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  • Mary M. Everett

    (Central Bank of Ireland, Dublin)

Abstract

European global banks played a significant role in the international transmission of liquidity during the period prior to the global financial crisis. This paper examines how European global banks channelled finance, raised in US wholesale funding markets, via cross-border banking flows to Irish retail banks during the first decade of the euro. The results indicate that global factors, namely the US-sourced funding of European global banks and global risk, were influential in driving cross-border banking inflows to Ireland. Furthermore, the empirical analysis suggests these global factors contributed to changes in domestic private non-financial sector credit during the Irish credit boom. These results shed new light on the factors influencing the international funding of Irish retail banks and changes in domestic credit during the credit boom.

Suggested Citation

  • Mary M. Everett, 2015. "Blowing the Bubble: The Global Funding of the Irish Credit Boom," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 339-365.
  • Handle: RePEc:eso:journl:v:46:y:2015:i:3:p:339-365
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    References listed on IDEAS

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    Cited by:

    1. John FitzGerald, 2019. "Contributing to Macro-Economic Policy in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 50(4), pages 613-623.
    2. International Monetary Fund, 2016. "Ireland: Financial Sector Assessment Program: Technical Note-Stress Testing the Banking System," IMF Staff Country Reports 2016/315, International Monetary Fund.
    3. Everett, Mary & McQuade, Peter & O’Grady, Michael, 2020. "Bank business models as a driver of cross-border activities," Journal of International Money and Finance, Elsevier, vol. 108(C).
    4. Mary Everett & Jakob de Haan & David‐Jan Jansen & Peter McQuade & Anna Samarina, 2021. "Mortgage lending, monetary policy, and prudential measures in small euro‐area economies: Evidence from Ireland and the Netherlands," Review of International Economics, Wiley Blackwell, vol. 29(1), pages 117-143, February.
    5. Lane, Philip, 2015. "The Funding of the Irish Domestic Banking System During the Boom," CEPR Discussion Papers 10777, C.E.P.R. Discussion Papers.
    6. Lodge, David & Pérez, Javier J. & Albrizio, Silvia & Everett, Mary & De Bandt, Olivier & Georgiadis, Georgios & Ca' Zorzi, Michele & Lastauskas, Povilas & Carluccio, Juan & Parrága, Susana & Carvalho,, 2021. "The implications of globalisation for the ECB monetary policy strategy," Occasional Paper Series 263, European Central Bank.

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    Keywords

    banking; credit boom; Ireland;
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