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This paper identifies the international credit channel of monetary policy by analyzing the universe of corporate loans in Mexico, matched with firm and bank balance-sheet data, and by exploiting foreign monetary policy shocks, given the large presence of European and U.S. banks in Mexico. The paper finds that a softening of foreign monetary policy increases the supply of credit of foreign banks to Mexican firms. Each regional policy shock affects supply via their respective banks (for example, U.K. monetary policy affects credit supply in Mexico via U.K. banks), in turn implying strong real effects, with substantially larger elasticities from monetary rates than quantitative easing. Moreover, low foreign monetary policy rates and expansive quantitative easing increase disproportionally more the supply of credit to borrowers with higher ex ante loan rates-reach-for-yield-and with substantially higher ex post loan defaults, thus suggesting an international risk-taking channel of monetary policy. All in all, the results suggest that foreign quantitative easing increases risk-taking in emerging markets more than it improves the real outcomes of firms.

Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Banks and Banking Reform --- Credit Channel of Monetary Policy --- Credit Supply --- Debt Markets --- Economic Stabilization --- Financial Globalization --- Foreign Banks --- Quantitative Easing (QE) --- Risk-Taking

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Portfolio rebalancing is a key transmission channel of quantitative easing in Japan. We construct a realistic rebalancing scenario, which suggests that the BoJ may need to taper its JGB purchases in 2017 or 2018, given collateral needs of banks, asset-liability management constraints of insurers, and announced asset allocation targets of major pension funds. Nonetheless, the BoJ could deliver continued monetary stimulus by extending the maturity of its JGB purchases or by scaling up private asset purchases. We quantify the impact of rebalancing on capital outflows and discuss JGB market signals that can be indicative of limits being within reach.

Portfolio management --- Quantitative easing (Monetary policy) --- Asset-liability management --- Asset-liability management (Banking) --- Funds management --- Financial institutions --- QE (Monetary policy) --- Queasing (Monetary policy) --- Banks and banking, Central --- Monetary policy --- Investment management --- Investment analysis --- Investments --- Securities --- Management --- Banks and Banking --- Money and Monetary Policy --- Public Finance --- Industries: Financial Services --- Investments: General --- Current Account Adjustment --- Short-term Capital Movements --- Portfolio Choice --- Investment Decisions --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Social Security and Public Pensions --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary Policy --- General Financial Markets: General (includes Measurement and Data) --- Banking --- Pensions --- Monetary economics --- Finance --- Investment & securities --- Pension spending --- Insurance companies --- Bank credit --- Unconventional monetary policies --- Expenditure --- Money --- Banks and banking --- Credit --- Financial instruments --- Japan