Domestic financial regulation and external borrowing
AbstractThis paper studies the relationship between domestic financial regulation and the incentive of non-banks to borrow from banks abroad using BIS banking data in a gravity framework. Conditional on a large set of macroeconomic controls, we find that under tighter domestic financial regulation non-banks borrow more abroad. Non-banks in a country on the upper quartile of a financial deregulation index borrow 21%–28% more than non-banks in a country with minimum regulation. The finding also holds for more disaggregated regulation measures. Interest rate controls and entry barriers to the banking sector are the most relevant types of regulation. The results in this paper indicate that international borrowing and lending is a prominent element to be taken into account in designing financial stability tools.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Bank of England in its series Bank of England working papers with number 429.
Length: 28 pages
Date of creation: 31 May 2011
Date of revision:
Contact details of provider:
Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH
Phone: +44 (0)171 601 4030
Fax: +44 (0)171 601 5196
Web page: http://www.bankofengland.co.uk/
More information through EDIRC
Bank regulation; cross-border banking;
Find related papers by JEL classification:
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-11 (All new papers)
- NEP-BAN-2011-06-11 (Banking)
- NEP-IFN-2011-06-11 (International Finance)
- NEP-REG-2011-06-11 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Graciela Kaminsky & Sergio Schmukler, 2003.
"Short-Run Pain, Long-Run Gain: The Effects of Financial Liberalization,"
NBER Working Papers
9787, National Bureau of Economic Research, Inc.
- Kaminsky, Graciela Laura & Schmukler, Sergio L., 2002. "Short-run pain, long-run gain : the effects of financial liberalization," Policy Research Working Paper Series 2912, The World Bank.
- Sergio L. Schmukler & Graciela Laura Kaminsky, 2003. "Short-Run Pain, Long-Run Gain: The Effects of Financial Liberalization," IMF Working Papers 03/34, International Monetary Fund.
- Asli Demirgüç-Kunt & Luc Laeven & Ross Levine, 2004.
"Regulations, market structure, institutions, and the cost of financial intermediation,"
Federal Reserve Bank of Cleveland, pages 593-626.
- Demirguc-Kunt, Asli & Laeven, Luc & Levine, Ross, 2004. "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 593-622, June.
- Asli Demirguc-Kunt & Luc Laeven & Ross Levine, 2003. "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation," NBER Working Papers 9890, National Bureau of Economic Research, Inc.
- Andrew K. Rose & Mark M. Spiegel, 2002.
"A Gravity Model of Sovereign Lending: Trade, Default and Credit,"
NBER Working Papers
9285, National Bureau of Economic Research, Inc.
- Andrew K. Rose & Mark M. Spiegel, 2004. "A Gravity Model of Sovereign Lending: Trade, Default, and Credit," IMF Staff Papers, Palgrave Macmillan, vol. 51(s1), pages 50-63, June.
- Andrew K. Rose & Mark M. Spiegel, 2002. "A gravity model of sovereign lending: trade, default and credit," Working Paper Series 2002-09, Federal Reserve Bank of San Francisco.
- Sa, Filipa & Towbin, Pascal & wieladek, tomasz, 2011.
"Low interest rates and housing booms: the role of capital inflows, monetary policy and financial innovation,"
Bank of England working papers
411, Bank of England.
- Filipa Sá & Pascal Towbin & Tomasz Wieladek, 2011. "Low interest rates and housing booms: the role of capital inflows, monetary policy and financial innovation," Globalization and Monetary Policy Institute Working Paper 79, Federal Reserve Bank of Dallas.
- Portes, Richard & Rey, Helene & Oh, Yonghyup, 2001. "Information and capital flows: The determinants of transactions in financial assets," European Economic Review, Elsevier, vol. 45(4-6), pages 783-796, May.
- Abdul Abiad & Enrica Detragiache & Thierry Tressel, 2010.
"A New Database of Financial Reforms,"
IMF Staff Papers,
Palgrave Macmillan, vol. 57(2), pages 281-302, June.
- Andrew K. Rose & Mark M. Spiegel, 2002. "A gravity model of sovereign lending: trade, default and credit," Working Papers in Applied Economic Theory 2002-09, Federal Reserve Bank of San Francisco.
- Lane, Philip R. & McQuade, Peter, 2013.
"Domestic credit growth and international capital flows,"
Working Paper Series
1566, European Central Bank.
- Philip Lane & Peter McQuade, 2009. "Domestic Credit Growth and International Capital Flows," The Institute for International Integration Studies Discussion Paper Series iiisdp428, IIIS.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publications Team).
If references are entirely missing, you can add them using this form.