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Cross-Border Prudential Policy Spillovers: How Much? How Important? Evidence from the International Banking Research Network

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  • Claudia M. Buch
  • Linda Goldberg

Abstract

The development of macroprudential policy tools has been one of the most significant changes in banking regulation in recent years. In this multi-study initiative of the International Banking Research Network, researchers from fifteen central banks and two international organizations use micro-banking data in conjunction with a novel dataset of prudential instruments to study international spillovers of prudential policy changes and their effects on bank lending growth. The collective analysis has three main findings. First, the effects of prudential instruments sometimes spill over borders through bank lending. Second, international spillovers vary across prudential instruments and are heterogeneous across banks. Bank-specific factors like balance sheet conditions and business models drive the amplitude and direction of spillovers to lending growth rates. Third, the effects of international spillovers of prudential policy on loan growth rates have not been large on average. However, our results tend to underestimate the full effect by focusing on adjustment along the intensive margin and by analyzing a period in which relatively few countries implemented country-specific macroprudential policies.

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  • Claudia M. Buch & Linda Goldberg, 2016. "Cross-Border Prudential Policy Spillovers: How Much? How Important? Evidence from the International Banking Research Network," NBER Working Papers 22874, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22874
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    Cited by:

    1. repec:bfr:fisrev:2017:21:14 is not listed on IDEAS
    2. Hoggarth, Glen & Jung, Carsten & Reinhardt, Dennis, 2016. "Capital inflows — the good, the bad and the bubbly," Bank of England Financial Stability Papers 40, Bank of England.
    3. repec:bfr:fisrev:2017:21:08 is not listed on IDEAS
    4. Forbes, Kristin & Reinhardt, Dennis & Wieladek, Tomasz, 2017. "The spillovers, interactions, and (un)intended consequences of monetary and regulatory policies," Journal of Monetary Economics, Elsevier, vol. 85(C), pages 1-22.
    5. Anton Korinek, 2016. "Currency Wars or Efficient Spillovers? A General Theory of International Policy Cooperation," NBER Working Papers 23004, National Bureau of Economic Research, Inc.
    6. Diana Bonfim & Sónia Costa, 2017. "International Banking and Cross-border Effects of Regulation: Lessons from Portugal," Working Papers w201705, Banco de Portugal, Economics and Research Department.
    7. repec:bfr:fisrev:2017:21:13 is not listed on IDEAS
    8. repec:bfr:fisrev:2017:21:12 is not listed on IDEAS
    9. Joshua Aizenman & Menzie D. Chinn & Hiro Ito, 2017. "Financial Spillovers and Macroprudential Policies," NBER Working Papers 24105, National Bureau of Economic Research, Inc.
    10. Anton Korinek, 2017. "Currency wars or efficient spillovers?," BIS Working Papers 615, Bank for International Settlements.
    11. Claudia M. Buch & Matthieu Bussiere & Linda Goldberg & Robert Hills, 2018. "The International Transmission of Monetary Policy," NBER Working Papers 24454, National Bureau of Economic Research, Inc.
    12. Stefan Avdjiev & Leonardo Gambacorta & Linda S. Goldberg & Stefano Schiaffi, 2017. "The Shifting Drivers of Global Liquidity," NBER Working Papers 23565, National Bureau of Economic Research, Inc.
    13. repec:bfr:fisrev:2017:21:09 is not listed on IDEAS
    14. repec:bfr:fisrev:2017:21:06 is not listed on IDEAS
    15. Jose M Berrospide & Ricardo Correa & Linda S Goldberg & Friederike Niepmann, 2017. "International Banking and Cross-Border Effects of Regulation: Lessons from the United States," International Journal of Central Banking, International Journal of Central Banking, vol. 13(2), pages 435-476, March.
    16. repec:bfr:fisrev:2017:21:15 is not listed on IDEAS
    17. repec:bfr:fisrev:2017:21:07 is not listed on IDEAS
    18. repec:bfr:fisrev:2017:21:03 is not listed on IDEAS
    19. repec:bfr:fisrev:2017:21:10 is not listed on IDEAS
    20. Becker, Chris & Ossandon Busch, Matias & Tonzer, Lena, 2017. "Macroprudential policy and intra-group dynamics: The effects of reserve requirements in Brazil," IWH Discussion Papers 21/2017, Halle Institute for Economic Research (IWH).
    21. repec:bfr:fisrev:2017:21:05 is not listed on IDEAS
    22. Klingelhöfer, Jan & Sun, Rongrong, 2017. "Macroprudential Policy, Central Banks and Financial Stability: Evidence from China," MPRA Paper 79033, University Library of Munich, Germany.
    23. repec:bfr:fisrev:2017:21:04 is not listed on IDEAS
    24. repec:bfr:fisrev:2017:21:02 is not listed on IDEAS
    25. repec:bfr:fisrev:2017:21:11 is not listed on IDEAS

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    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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