Foreign capital flows, credit spreads, and the business cycle

Ding Du, Wade Rousse

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


Previous studies have found that foreign capital flows into the US Treasury and corporate-bond markets drive US long-term interest rates. In this paper, we extend the literature by showing that (1) foreign capital flows also drive the US risk structure of interest rates (i.e., credit spreads), and (2) the impacts of foreign capital flows through the credit spread on corporate financing and investment as well as aggregate economic activities are significant, even outside of the Global Financial Crisis period.

Original languageEnglish (US)
Pages (from-to)59-79
Number of pages21
JournalJournal of International Financial Markets, Institutions and Money
StatePublished - Nov 2018


  • Corporate financing and investment
  • Credit spreads
  • Foreign capital flows
  • Global banking glut
  • Global savings glut

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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