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ORCID
N/A
Access Type
Open Access Thesis
Document Type
thesis
Degree Program
Political Science
Degree Type
Master of Arts (M.A.)
Year Degree Awarded
2017
Month Degree Awarded
May
Abstract
One policy reaction of the Federal Reserve to the 2008 financial crisis was the extension of currency swap lines to various foreign central banks; this constituted the global transfer of billions of US dollars of wealth and exhibited the role of the US as a global lender of last resorts. Some have attempted to explain the supply of these lines as a function of risk mitigation for domestic US banks with foreign holdings, but no one has yet investigated the social dynamics of this phenomenon. In recognizing that the global demand for emergency liquidity was greater than the Federal Reserve’s supply, this paper investigates how the similarity of foreign central banks affected the selection of which banks would receive liquidity extensions. I calculate similarity scores to the US Federal Reserve for foreign banks which applied for liquidity extensions during the crisis. These scores measure the textual similarity of foreign central bankers’ speeches to those of the Fed, the institutional design similarity to that of the Fed, and the similarity of foreign central banks’ governors’ educational and professional backgrounds to those of the 2008 Federal Open Markets Commission members. I find that the similarity of foreign central banks to the US with regard to these three criteria offers a significantly stronger and statistically more robust answer to the question of what drove this decision process, and offer implications for international regulatory mechanisms to ameliorate this tendency toward social homophily.
DOI
https://doi.org/10.7275/10008073
First Advisor
Kevin L. Young
Second Advisor
Meredith Rolfe
Recommended Citation
Marple, Timothy, "Bailed Out With A Little Help From My Friends: Social Similarity And Currency Swaps During The 2008 Crisis" (2017). Masters Theses. 519.
https://doi.org/10.7275/10008073
https://scholarworks.umass.edu/masters_theses_2/519
Included in
Behavioral Economics Commons, Finance Commons, International Relations Commons, Political Economy Commons