Publications
Publications
- September 2019
- American Economic Review: Insights
The Dollar, Bank Leverage and Deviations from Covered Interest Parity
By: Stefan Advjiev, Wenxin Du, Catherine Koch and Hyun Song Shin
Abstract
We document a triangular relationship in that a stronger dollar goes hand in hand with larger deviations from covered interest parity (CIP) and contractions of cross-border bank lending in dollars. We argue that underpinning the triangle is the role of the dollar as a key barometer of risk-taking capacity in global capital markets.
Keywords
Citation
Advjiev, Stefan, Wenxin Du, Catherine Koch, and Hyun Song Shin. "The Dollar, Bank Leverage and Deviations from Covered Interest Parity." American Economic Review: Insights 1, no. 2 (September 2019): 193–208.