Endogenous Money in the Age of Financial Liberalization Gökçer Özgür and Korkut A. Ertürk

[Working Paper No. 05/2008] The paper reports results showing a much weakened statistical relationship between total bank credit, total deposits and the broad money supply for the period after 1995 for the US, where no statistical causation can be discerned in either direction. This has been the result of the changing nature of the credit creation process where banks have acquired almost total independence in extending credit from required reserves and core deposits and an ability to circumvent the constraint posed by capital requirements through asset securitization. Because of the explosive increase in nonbank intermediation this has caused, the expansion…

Banking FDI in Latin America: An Economic Coup Sukanya Bose

Since the mid-1990s, foreign direct investment into the banking industry in many emerging market economies has been growing at an unprecedented scale. The paper examines the consequences of this phenomenon on banking sector's efficiency, credit aggregates, and stability in the context of the Latin American economies. Banking_FDI (Download the full text in PDF format)