Channeling the iron ore super-cycle : the role of regional bank branch networks in emerging markets / Helge C.N. Littke
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Channeling the iron ore super-cycle
Discovery
1024836495
URN
urn:nbn:de:gbv:3:2-93030
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Publication history
Halle (Saale) : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, [21. Juni 2018]
Content
1 Online-Ressource (III, 61 Seiten, 1,42 MB) : Illustrationen, Diagramme
Edition
Language
eng
Comment
Abstract
The role of the financial system to absorb and to intermediate commodity boom induced windfall gains efficiently presents one of the most pressing issues for developing economies. Using an exogenous increase in iron ore prices in March 2005, I analyse the role of regional bank branch networks in Brazil in reallocating capital from affected to non-affected regions. For the period from March 2004 to March 2006, I find that branches directly exposed to this shock by their geographical location experience an increase in deposit growth in the post-shock period relative to non-affected branches. Given that these deposits are not reinvested locally, I further show that branches located in the non-affected region increase lending growth depending on their indirect exposure to the booming regions via their branch network. Even tough, these results provide evidence against a Dutch Disease type crowding out of the non-iron ore sector, further evidence suggests that this capital reallocation is far from being optimal.
Series
IWH-Diskussionspapiere ; 2018, no. 11 (June 2018) ppn:837399270