The Brown Bag Lunch is a weekly series where professors and doctoral students presenting their ongoing research.
This week's speaker is Paola Morales, BCC Fellow | Central Bank of Colombia, giving a talk entitled
Spillover Effects of Foreign Monetary Policy on the Foreign Indebtedness of Financial and Non-financial Companies
About the presented paper | This paper analyses the impact of foreign conventional and unconventional monetary policy (from a broad range of countries) on the foreign lending of Colombian financial and non-financial companies, focusing particularly on periods of prolonged monetary policy easing. It also evaluates if capital controls can help to mitigate the spillover effects of foreign monetary policy. The paper uses two unique loan-level datasets on cross-border lending that cover all the foreign loans granted by foreign-located financial institutions to domestically located financial and non-financial companies, respectively. The results support the existence of spillover effects of foreign monetary policy into foreign lending of resident banks and domestic firms. Periods of foreign monetary policy tightening (softening) are associated with increases (decreases) on loan amount received by Colombian companies. The paper also finds that capital controls can help to mitigate these spillover effects and that the interaction of capital controls and foreign monetary policy plays an important role.
For more details please send an e-mail to Xiaojing Zhou at xiaojing.zhou@graduateinstitute.ch.