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Testing the global banking glut hypothesis

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  • Kauko, Karlo
  • Punzi, Maria Teresa

Abstract

This paper presents VAR results on the recent economic history of the USand focuses on the dependence of US macro financial variables on international capital flows. Both gross and net flows are included in the analysis. The results indicate that cross-border funding has affected the build-up in the US housing market irrespective of how these flows are defined and measured. Both the savings glut hypothesis and the banking glut hypothesis are supported by these findings. However, net banking flows appear to explain the higher volatility in the increase in house prices as well as the mortgage loan boom.

Suggested Citation

  • Kauko, Karlo & Punzi, Maria Teresa, 2015. "Testing the global banking glut hypothesis," FinMaP-Working Papers 41, Collaborative EU Project FinMaP - Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.
    • Handle: RePEc:zbw:fmpwps:41
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    Cited by:

    1. Huber, Florian & Punzi, Maria Teresa, 2020. "International Housing Markets, Unconventional Monetary Policy, And The Zero Lower Bound," Macroeconomic Dynamics, Cambridge University Press, vol. 24(4), pages 774-806, June.
    2. Pietro Cova & Filippo Natoli, 2017. "International financial flows and the risk-taking channel," Temi di discussione (Economic working papers) 1152, Bank of Italy, Economic Research and International Relations Area.
    3. Josef Bajzik & Jan Janku & Simona Malovana & Klara Moravcova & Ngoc Anh Ngo, 2023. "Monetary Policy Has a Long-Lasting Impact on Credit: Evidence from 91 VAR Studies," Working Papers 2023/19, Czech National Bank.
    4. repec:ire:issued:v:26:n:03:2023:p:342-391 is not listed on IDEAS
    5. Cova, Pietro & Natoli, Filippo, 2020. "The risk-taking channel of international financial flows," Journal of International Money and Finance, Elsevier, vol. 102(C).
    6. Huber, Florian & Punzi, Maria Teresa, 2017. "The shortage of safe assets in the US investment portfolio: Some international evidence," Journal of International Money and Finance, Elsevier, vol. 74(C), pages 318-336.
    7. Fratianni, Michele & Giri, Federico, 2017. "The tale of two great crises," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 5-31.
    8. Sariye Belgin Akcay, 2023. "Current Account Imbalances, House Prices, and Institutions," International Real Estate Review, Global Social Science Institute, vol. 26(3), pages 343-392.
    9. Punzi, Maria Teresa & Chantapacdepong, Pornpinun, 2017. "Spillover Effects of Unconventional Monetary Policy in Asia and the Pacific," ADBI Working Papers 630, Asian Development Bank Institute.

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    More about this item

    Keywords

    Global Banking Glut; Global Savings Glut; Cross-Border Banking Transactions; House Prices; Mortgage Loans; VAR model;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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