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How Do CCyBs Travel? Internal Capital Markets & Domestic Borrowing

Author

Listed:
  • Björn Imbierowicz

    (Deutsche Bundesbank)

  • Axel Loeffler

    (Deutsche Bundesbank; Deutsche Bundesbank)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

  • Ursula Vogel

    (Deutsche Bundesbank)

Abstract

Macroprudential capital buffers are meant to contain risk inside the activating jurisdiction. We show how they travel through multinational firms. Exploiting staggered countercyclical capital buffer (CCyB) activations in host countries of German multinationals' foreign subsidiaries, we trace a firm-side leakage channel. Subsidiary bank credit contracts by 10.6 percent per percentage-point CCyB, and falls relative to nonbank credit within the same borrower and quarter; subsidiary total borrowing shows no detectable change across creditor domiciles. German parents replace the lost credit with internal debt and refinance at home, raising the credit-weighted default risk of German lenders' exposure to these groups by about 20 percent of its mean. The affected multinational groups owe German lenders 26 billion euros, the exposure base on which this rerouting operates. With no German CCyB active, risk returns home.

Suggested Citation

  • Björn Imbierowicz & Axel Loeffler & Steven Ongena & Ursula Vogel, 2026. "How Do CCyBs Travel? Internal Capital Markets & Domestic Borrowing," Swiss Finance Institute Research Paper Series 26-56, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2656
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    Keywords

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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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