Our Blog

In our recent study, we examine how inflation reshapes bank asset allocation across 63 emerging economies from 2000 to 2021, showing that while moderate inflation has minimal effect, extreme inflationary shocks trigger a severe, persistent shift away from private sector lending and toward government securities. Crucially, this crowding-out effect compounds over time to peak at a five-year horizon, underscoring the vital role of central bank macroprudential oversight and proactive asset-liability management in preventing long-term credit supply disruptions.

Carlos Giraldo, Iader Giraldo, Jose E. Gomez-Gonzalez, and Jorge M. Uribe have published the study “Is the international bank lending channel driven by ownership? Evidence from local banks and foreign subsidiaries” in the Journal of Banking Regulation. The research examines whether bank ownership influences the international transmission of U.S. monetary policy, using data from 2,039 banks across 116 countries. The findings suggest that, although foreign-owned banks appear to respond more strongly to these shocks, the differences are not statistically significant, highlighting the importance of bank balance-sheet characteristics and exposure to global financial conditions.

Geopolitical tensions have become an increasingly important source of economic and financial uncertainty. Events such as the Russia–Ukraine war, tensions between the United States and China, trade disputes, sanctions, and regional conflicts have intensified concerns about the resilience of financial systems, particularly in emerging economies, where banks play a central role in financial intermediation and remain heavily dependent on domestic funding conditions.

This paper develops a multidimensional index of geoeconomic fragmentation and examines its impact on international trade. The results show that fragmentation has increased since the global financial crisis and reduces trade, particularly across geopolitical blocs. At the same time, non-aligned countries are emerging as key connectors between blocs, suggesting that globalization is not disappearing but being reconfigured.

Carlos Giraldo, Iader Giraldo, Jose E. Gomez-Gonzalez, and Jorge M. Uribe have published the study “Climate hazards meet housing affordability: Linking environmental risks to real estate markets across the globe” in Ecological Economics. The research examines the relationship between climate conditions and housing affordability across 195 cities, highlighting stronger associations in markets experiencing greater housing price pressures.

What characterizes foreign direct investment in Paraguay? This study examines the evolution of foreign direct investment between 2008 and 2024, highlighting greater diversification in both the origin of capital and the sectors receiving investment. The findings underscore the contribution of foreign direct investment to Paraguay’s economic growth and its integration into international markets.

When the U.S. Federal Reserve changes interest rates, which banks transmit those shocks more strongly to the rest of the world? Conventional wisdom suggests foreign-owned banks should be more sensitive because they belong to multinational banking groups. Our evidence, based on more than 2,000 banks across 116 countries, suggests a different conclusion: ownership alone is not a reliable predictor of how international monetary shocks affect bank lending.

Geopolitical risk not only affects bank lending; it also weakens deposit growth, limiting banks’ ability to support economic activity. The findings highlight an increasingly important source of vulnerability for financial systems in emerging economies.