{"title":"Carry trade behavior by non-US banks","authors":"Yasutake Homma , Katsushi Suzuki","doi":"10.1016/j.ribaf.2024.102618","DOIUrl":null,"url":null,"abstract":"<div><div>Carry trade behavior by banks is considered to lead their solvency and liquidity risks. This study examines the carry trade behavior of non-US banks by testing the dynamics of short-term US dollar bond issuances. We find that non-US banks, particularly those in advanced economies, issue a larger amount of US dollar bonds under favorable carry trade conditions. They also allocate the proceeds to short-term investment assets, suggesting their engagement in carry trade behavior. However, we do not consistently observe the same relationship between US dollar bond issuances and favorable carry trade conditions in emerging economies. This finding aligns with previous studies indicating that banks in emerging economies do not engage in carry trade behavior.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"73 ","pages":"Article 102618"},"PeriodicalIF":6.3000,"publicationDate":"2024-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in International Business and Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0275531924004112","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
Carry trade behavior by banks is considered to lead their solvency and liquidity risks. This study examines the carry trade behavior of non-US banks by testing the dynamics of short-term US dollar bond issuances. We find that non-US banks, particularly those in advanced economies, issue a larger amount of US dollar bonds under favorable carry trade conditions. They also allocate the proceeds to short-term investment assets, suggesting their engagement in carry trade behavior. However, we do not consistently observe the same relationship between US dollar bond issuances and favorable carry trade conditions in emerging economies. This finding aligns with previous studies indicating that banks in emerging economies do not engage in carry trade behavior.
期刊介绍：
Research in International Business and Finance (RIBAF) seeks to consolidate its position as a premier scholarly vehicle of academic finance. The Journal publishes high quality, insightful, well-written papers that explore current and new issues in international finance. Papers that foster dialogue, innovation, and intellectual risk-taking in financial studies; as well as shed light on the interaction between finance and broader societal concerns are particularly appreciated. The Journal welcomes submissions that seek to expand the boundaries of academic finance and otherwise challenge the discipline. Papers studying finance using a variety of methodologies; as well as interdisciplinary studies will be considered for publication. Papers that examine topical issues using extensive international data sets are welcome. Single-country studies can also be considered for publication provided that they develop novel methodological and theoretical approaches or fall within the Journal''s priority themes. It is especially important that single-country studies communicate to the reader why the particular chosen country is especially relevant to the issue being investigated. [...] The scope of topics that are most interesting to RIBAF readers include the following: -Financial markets and institutions -Financial practices and sustainability -The impact of national culture on finance -The impact of formal and informal institutions on finance -Privatizations, public financing, and nonprofit issues in finance -Interdisciplinary financial studies -Finance and international development -International financial crises and regulation -Financialization studies -International financial integration and architecture -Behavioral aspects in finance -Consumer finance -Methodologies and conceptualization issues related to finance
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