ABSTRACT
Commercial banks and currency kiosk bureaus provide exchange services throughout Ciudad Juarez. This study employs newspaper data to examine how the bank and kiosk sell-buy spreads are affected by border crossings, the bilateral peso per dollar exchange rate, and 90-day Mexico – U.S. treasury yield differentials. Sample data are from January 2009 through June 2016. Parameter estimation is carried out using a GLS ARMAX procedure. Empirical results indicate that bank spreads increase as the peso weakens. Exchange bureau spreads decrease as cross-border traffic flows increase. Currency kiosk spreads tend to widen as 90-day yield gaps become larger.
Acknowledgments
Financial support for this research was provided by El Paso Water, National Science Foundation Grant DRL-1740695, Texas Department of Transportation ICC 24-0XXIA001, TFCU, and the UTEP Center for the Study of Western Hemispheric Trade. Helpful comments and suggestions were provided by Steven Fullerton and two anonymous referees.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Data availability statement
Data employed for this study are archived at the University of Texas at El Paso Library and can be downloaded for free via https://scholarworks.utep.edu/ef_data/2/