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This paper provides a new perspective on the exchange rate disconnect puzzle by referring to the expectations building mechanism in foreign exchange markets. Therefore, we analyze the role of expectations regarding macroeconomic fundamentals for expected exchange rate changes. In doing so, we...
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The paper uses a panel of more than 1m German firms over 2010-2016, to provide the first firm-bank level evidence of … two structural features of Germany's banking landscape: the local segmentation of credit markets for small and medium … medium firms in Germany and also have an explicit mandate to lend to the local public sector. With spreads on local …
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recourse to central bank finance is rather limited and does not affect the risk-taking behaviour of banks in a non …-stressed country such as Germany. Yield-seeking strategies were predominantly pursued by strong banks in Germany. Thus, with respect to … capitalised banks, a kind of "hidden moral suasion" or "home-biased" gambling for resurrection to actively push the sovereign-bank …
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