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International Banking and Cross-Border Effects of Regulation: Lessons from Poland

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  • Krzysztof Gajewski

    (Narodowy Bank Polski)

  • Oskar Krzesicki

    (Narodowy Bank Polski)

Abstract

The main goal of this paper is to determine whether foreign banks adjust their lending in Poland in response to changes to regulatory policy in their home countries. Poland, with its conservative, predominately foreign-owned banks concentrated on domestic activities, is an interesting case to study the existence of inward policy spillovers. Bank-level data and fixedeffect panel models are used to assess the impact of homecountry regulations on the quarterly growth rate of lending to the domestic non-financial private sector. We especially focus on the changes in capital requirements, as they have been expected by Polish regulators to negatively affect the operations of foreign-owned banks in Poland. We find that tightening capital requirements in the home countries of Polish foreign-owned banks has a significant, negative effect on credit extension in Poland; however, when we also account for Polish regulations in this area, the impact of home-country changes is no longer significant, which suggests that local regulatory actions are more important for banks. We also document the impact of cumulative changes in prudential policies that differs depending on cycle conditions in the home countries of foreign-owned banks.

Suggested Citation

  • Krzysztof Gajewski & Oskar Krzesicki, 2017. "International Banking and Cross-Border Effects of Regulation: Lessons from Poland," International Journal of Central Banking, International Journal of Central Banking, vol. 13(2), pages 315-340, March.
  • Handle: RePEc:ijc:ijcjou:y:2017:q:1:a:12
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    References listed on IDEAS

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    1. Aiyar, Shekhar & Calomiris, Charles W. & Hooley, John & Korniyenko, Yevgeniya & Wieladek, Tomasz, 2014. "The international transmission of bank capital requirements: Evidence from the UK," Journal of Financial Economics, Elsevier, vol. 113(3), pages 368-382.
    2. International Monetary Fund, 2012. "Credit Growth and the Effectiveness of Reserve Requirements and Other Macroprudential Instruments in Latin America," IMF Working Papers 12/142, International Monetary Fund.
    3. Beata Bierut, & Tomasz Chmielewski & Adam Głogowski, & Sławomir Zajączkowski & Andrzej Stopczyński, 2015. "Implementing Loan-To-Value and Debt-To-Income ratios: Learning from country experiences. The case of Poland," NBP Working Papers 212, Narodowy Bank Polski, Economic Research Department.
    4. Aiyar, Shekhar & Calomiris, Charles & Hooley, John & Korniyenko , Yevgeniya & Wieladek, Tomasz, 2014. "The international transmission of bank capital requirements: evidence from the United Kingdom," Bank of England working papers 497, Bank of England.
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    1. repec:eee:jimfin:v:90:y:2019:i:c:p:175-186 is not listed on IDEAS
    2. Gajewski, Krzysztof & Jara, Alejandro & Kang, Yujin & Mok, Junghwan & Moreno, David & Serwa, Dobromił, 2019. "International spillovers of monetary policy: Lessons from Chile, Korea, and Poland," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 175-186.

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