José María Serena

The Impact of the Global Economic and Financial Crisis on Central Eastern and Southeastern Europe (CESEE) and Latin America

This paper reviews the impact of the global economic and financial crisis on two distinct emerging market regions: Central, Eastern and Southeastern Europe (CESEE) and Latin America. Similar to other emerging economies, both regions were initially surprisingly resilient as the crisis gathered momentum. They were, however, both strongly affected by the sharp retrenchment in capital inflows and the collapse of global demand that followed the demise of Lehman Brothers in September 2008. Notwithstanding differences in the channels of transmission and the intensity of the propagation, the short-term outcome in 2009 was one of the deepest recessions in decades. As both regions differ in several important respects, the question arises how structural and institutional features as well as policies before and during the crisis have affected the transmission of global events to the two regions under review.

International Reserves and Gross Capital Flows - Dynamics During Financial Stress

This paper explores the role of international reserves as a stabilizer of international capital flows during periods of global financial stress. In contrast with previous contributions, aimed at explaining net capital flows, we focus on the behavior of gross capital flows. We analyze an extensive cross-country quarterly database using event analyses and standard panel regressions. We document significant heterogeneity in the response of resident investors to financial stress and relate it to a previously undocumented channel through which reserves are useful during financial stress. International reserves facilitate financial disinvestment overseas by residents, offsetting the simultaneous drop in foreign financing.

Global financial integration, monetary policy and reserve accumulation, assessing the limits in emerging economies

This paper assesses whether domestic costs of reserve accumulation -and in particular monetary costs- constitute an eventual limit to the process in emerging markets. We find that sterilization is the first measure to deal with these costs. Then, we turn to study whether diminishing ability to deal with the monetary inflows through sterilization is an effective limit to the process, Indeed, when the scope for sterilization is reduced, accumulation diminishes. However, this constraint, albeit relevant in practice, has not constituted an effective limit to accumulation, hitherto.

Sovereign External Assets and the Resilience of Global Imbalances

Sovereign external assets (SEAs) comprise foreign exchange reserves and sovereign wealth funds (SWFs). The global stock of reserves reached 7

How firms borrow in international bond markets

trn in the second quarter of 2008, but data on SWF are rather elusive. Our estimation puts the SWFs at around 2,5

How Firms Borrow in International Bond Markets: Securities Regulation and Market Segmentation

trn dollars by 2007 and in the last years they have grown at a high pace, fostered by high commodity prices. Therefore, SEAs have surpassed the 10

Changes in Funding Patterns by Latin American Banking Systems: How Large? How Risky?

trn mark (around 5% of global assets and 15% of global GDP). This paper argues that reserves and SWF assets should be jointly considered for the assessment of global imbalances. Both are official capital outflows from developing to developed countries, both hinder internal adjustment in current account surplus countries, both help to cover the financing needs of deficit countries, in particular in the US, and, therefore, both contribute to sustain global imbalances. The importance of SEAs in financing the external imbalances of the US has been widely recognised but scantly measured. Our rule-of-thumb calculations suggests that they have greatly increased their importance in the last years, having surpassed the US

Integración Financiera Y Modelos De Financiación De Los Bancos Globales (Financial Integration and Global Banks Funding Models)

trillion increase in 2007; relative to US financing needs, this amount represents around a 135% and 50% of net and gross needs, respectively, in 2007. Reserves have in the last years contributed 80% and SWFs 20%.Looking ahead, two main conclusions can be put forward: 1) the relative importance SWFs in the financing of the US deficits and global imbalances is set to increase (also relative to reserves), but this is conditional to commodity prices remaining at high levels. On the one hand, the economic motivation of SWFs -intertemporal smoothing- is more palatable than that of reserves (exchange rate management), despite political concerns on SWFs; on the other hand, SWFs do not have significant internal costs, contrary to reserves, whose monetary and fiscal costs are increasing in the margin; 2) SEAs can well buttress US financial needs in the years ahead, providing resilience to the global imbalances. Dramatic shifts in the pace of SEAs accumulation -due for instance to an adjustment of commodity prices- or in the investment allocation would jeopardise these prospects.

Contagion and Spillovers: New Insights from the Crisis

This paper aims to investigate how firms from emerging economies choose among different international bond markets: global, US144A and Eurobond markets. The authors explore if the ranking in regulatory stringency –global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – leads to a segmentation of borrowers.,The authors use a novel data set from emerging economy firms, treating them as consolidated entities. The authors also obtain descriptive evidence and perform univariate non-parametric analyses, conditional and multinomial logit analyses to study firms’ marginal debt choice decisions.,The authors show that firms with poorer credit quality, less ability to absorb flotation costs and more informational asymmetries issue debt in US144A and Eurobond markets. On the contrary, firms issuing global bonds – subject to full Securities and Exchange Commission requirements – are financially sounder and larger. This exercise also shows that following the global crisis, firms from emerging economies are more likely to tap less regulated debt markets.,This is, to the authors’ knowledge, the first study that examines if the ranking in stringency of regulation – global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – is consistent with an ordinal choice by firms. The authors also explore if this ranking is monotonic in all determinants or there are firm-specific features which make firms unlikely to borrow in a given market. Finally, the authors analyze if there are any changes in the debt-choice behavior of firms after the global financial crisis.

Firms´financial soundness and access to capital markets

En este trabajo se investiga como las empresas no financieras de mercados emergentes eligen entre los diferentes mercados internacionales de bonos para financiarse: el mercado global, el US144A y el mercado de eurobonos. Utilizando la relacion entre el mercado de emision y los requerimientos regulatorios de informacion de cada mercado, se concluye que las empresas con menor calidad crediticia, menor capacidad para absorber los costes de flotacion y con mayores asimetrias de informacion emiten deuda en el mercado US144A y en el de eurobonos, donde la regulacion es mas laxa y la informacion menos publica. Por el contrario, las empresas que emiten bonos en el mercado global, sujeto a la regulacion de la SEC, presentan mejores condiciones financieras y son mas grandes. Tambien se concluye que tras la crisis financiera global las empresas tienden mas a emitir deuda en los mercados menos regulados. Los resultados se basan en evidencia descriptiva, analisis univariante no parametrico y analisis multivariante utilizando un logit multinomial. Para realizar este trabajo hemos elaborado una nueva base de datos que incluye informacion sobre las emisiones de deuda de las empresas y su informacion financiera para el periodo 2000-2014. Debido a la compleja estructura de financiacion de muchas empresas, analizamos las hojas de balance de la empresa que garantiza la deuda, que puede no ser la entidad emisora. La base de datos incluye 3.944 bonos, garantizados por empresas de 36 economias emergentes y acumulando un total de 1,2 miles de millones de dolares.