Irina Bunda

The bank liquidity smile across exchange rate regimes

Combining panel data on bank liquidity at the individual level and data on their macroeconomic environment, for a sample of commercial banks in emerging countries between 1995 and 2004, we show that there exists a ‘bank liquidity smile across exchange rate regimes’. In extreme regimes at both ends of the line, i.e. for pure floating exchange rate regimes at one end and currency boards and dollarised economies at the other end, bank assets are more liquid than in intermediate regimes.

The Impact of the Global Financial Crisis on Emerging and Newly Industrialized Asia

The paper analyzes the impact of the global financial crisis on capital flows, financial markets and economic activity in Asia and attempts to explain why Asian markets were hit hard despite relatively strong fundamentals, and why the subsequent recovery was relatively quick. The openness of a country to trade and finance and the degree of integration into international financial markets are shown to be important determinants of the swings in economic activity and capital flows during both the reversal and recovery phases. It also discusses the role played by macroeconomic and financial policies in the recovery and concludes with some lessons from Asias experience.