https://macropaperwarehouse.com/authors/luis-a.v.-catao/Luís A.V. CatãoHugo -- gohugo.ioen-usWed, 01 Jan 2025 00:00:00 +0000https://macropaperwarehouse.com/papers/global-factors-in-noncore-bank-funding-and-exchange-rate-flexibility/Wed, 01 Jan 2025 00:00:00 +0000https://macropaperwarehouse.com/papers/global-factors-in-noncore-bank-funding-and-exchange-rate-flexibility/<p>Research question and motivation: The paper asks how far global factors drive the foreign-borrowing component of advanced-economy banks&rsquo; non-core funding, and whether exchange rate flexibility (and macroprudential policy) can insulate national banking systems from those global factors. This speaks to the long-running &ldquo;trilemma vs. dilemma&rdquo; debate (Rey 2015 vs. Mundell 1963; Miranda-Agrippino and Rey 2020) over whether a flexible exchange rate buys monetary/financial autonomy under open capital accounts. Non-core funding (funding other than deposits — repos, debt securities, foreign borrowing) matters because, per Shin and Shin (2011), Hahm et al. (2013) and Jorda et al. (2017), it is an elastic, crisis-predictive funding source closely tied to credit booms and leverage.</p>