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Capital Controls and Capital Flows in Emerging EconomiesPolicies, Practices, and Consequences$
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Sebastian Edwards

Print publication date: 2007

Print ISBN-13: 9780226184975

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226184999.001.0001

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The International Exposure of U.S. Banks

The International Exposure of U.S. Banks

Europe and Latin America Compared

Chapter:
(p.203) 5 The International Exposure of U.S. Banks
Source:
Capital Controls and Capital Flows in Emerging Economies
Author(s):

Linda S. Goldberg

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226184999.003.0006

This chapter reviews the changing international exposures of U.S. bank balance sheets since the mid-1980s. The data indicate that U.S. banks may even play a positive role in helping reduce the amplitude of business cycles in smaller nations. The relationships between business cycle variables and U.S. bank foreign exposures appear unstable over time and differentiated by region. U.S. bank claims on Europe exhibit positive growth in the cross-border and local claim components, with this growth alternatively attributable to trend or to U.S. gross domestic product (GDP) cyclical transmission. It is shown that cyclical variables explain very little of the movements observed in cross-border claims or the growth in local claims. The evidence certainly does not support strong U.S. business-cycle transmission. Indeed, the lack of importance of local business-cycle variables as determinants of U.S. bank foreign exposures may have direct policy relevance.

Keywords:   balance sheets, U.S. banks, business cycles, foreign exposures, Europe, gross domestic product

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