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Global Liquidity Determinants Across Emerging and Advanced Countries

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  • Renata Karkowska

    (Faculty of Management, University of Warsaw, Polan)

Abstract

The paper explores the concept of global liquidity and its determinants, focusing on the banking system in advanced and emerging markets. We explore the implications of the interaction between liquidity and its local, global and financial markets determinants. We also analyze the global liquidity channels, i.e. whether foreign banks play a significant role in the country’s financial system. The study focuses on the investigation of banks’ liquidity determinants in 42 countries (advanced and emerging/developing countries) over the 2000–2011 period. The results show the significance of the differences in global liquidity depending on the country’s level of development. We find support to the conjecture that globalization and global banks’ leverage may convey some useful information on global liquidity. We also present an important observation that banks’ lending in advanced countries is shielded from the monetary policy because of their ability to freely access alternative sources of funds.

Suggested Citation

  • Renata Karkowska, 2015. "Global Liquidity Determinants Across Emerging and Advanced Countries," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(3), pages 152-170, May.
    • Handle: RePEc:sgm:jbfeuw:v:1:y:2015:i:3:p:152-170
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    References listed on IDEAS

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    More about this item

    Keywords

    global liquidity; emerging countries; credit supply; financial instability;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • F3 - International Economics - - International Finance

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