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

Bussière, Matthieu; Schmidt, Julia; Vinas, Frédéric

doi:10.2139/ssrn.2833842

Cited by 14 publications

(8 citation statements)

References 20 publications

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“…As shown in table 4 (column 1), the coefficient of all measures combined is positive and statistically significant at the 5 percent level. These findings are in line with the evidence for French banks reported by Bussière, Schmidt, and Vinas (2017), and for the foreign branches and cross-border lending of Italian banks reported by Caccavaio, Carpinelli, and Marinelli (2017). The index is not significant contemporaneously, or two quarters after the measures are Notes: This table reports the effects of changes in destination-country regulation and firm characteristics on log changes in total claims on the destination country.…”

Section: Baseline Analysis Of Outward Transmission Of Prudential Polisupporting

confidence: 92%

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

2016

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The large and concentrated international activities of Dutch banks make the Netherlands particularly relevant for assessing the outward transmission of prudential policies. Analysis of the quarterly international claims of twenty-five Dutch banks in sixty-three countries over 2000-13 indicates that Dutch banks increase lending in countries that tighten prudential regulation. This result is driven particularly by larger banks, by banks with higher deposit ratios, by lending to advanced economies, and by lending in the post-crisis period. The result is not significant in most other subsamples. These findings suggest that banks react to changes in local prudential regulation via foreign lending-which could come either from regulatory arbitrage or from signaling effects of prudential policy on country risk. This contributes to the case for the reciprocation of macroprudential policy.

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Section: Baseline Analysis Of Outward Transmission Of Prudential Polisupporting

confidence: 92%

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

2016

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“…This indicates that a prudential tightening in destination-country exerts a positive effect on cross-border lending from France. Such evidence for "leakage" of prudential policies is in line with a number of empirical papers such as Aiyar et al (2014b) and Reinhardt and Sowerbutts (2015) for the UK or Bussiere et al (2017) in the French case.…”

Section: Baseline Regressionsupporting

confidence: 85%

“…They find evidence that unregulated (foreign) banks increase their lending in response to tighter capital requirements; and they estimate that this substitution can amount to about one-third of the initial effect from the regulatory change. Bussiere et al (2017) find similar result on the French casebut they focus on the inward transmission while we address outward spillovers. Some studies points also out to heterogeneities regarding recipient countries, such as Cerutti et al (2017a) who suggest stronger leakages in the financially more open economies.…”

Section: Literature Reviewsupporting

confidence: 70%

A Prudential trade-off? Leakages and Interactions with Monetary Policy*

Meunier

Pedrono

2021

SSRN Journal

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While monetary and prudential policies are generally analysed separately, this paper focuses on how the two interact. Taking an international perspective, we show that monetary policy in a centre economy (Euro Area) spill over its borders through bank lending -therefore inducing volatility in cross-border lending flows. Investigating a sample of 30 advanced and emerging economies, we find evidence that prudential policy in the receiving-country interact with monetary policy so that a tighter prudential stance in the recipient-country mitigates the volatility of banking flows induced by monetary policy abroad. But we also show that a tighter prudential stance -interactions apartimplies a higher growth of cross-border lending. Taken together, these results might suggest a trade-off: while a tighter prudential stance reduces the volatility of cross-border lending flows, it also implies that local borrowers resort more to lending from abroad. Taking advantage of the granularity of our confidential dataset, we finally explore heterogeneities and show that such leakages arise only for financially more open economies and only through the financial sector, with evidence that such leakages are driven by intra-group lending.

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“…26. Extensive literature comprehends the geographies of the US in Berrospide et al (2016), Dutch banks in Frost et al (2016), France in Bussière et al (2016), Poland in Gajewski and Krzesicki (2017).…”

Section: Discussionmentioning

confidence: 99%

The regulation of multilateral development banks: is it needed? A preliminary analysis

Gianfagna

Crimaldi

Gallan

2021

JFRC

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Purpose A difference is noted by comparing the net loans to the non-financial sector in the two sets of institutions. The post-global financial crisis (GFC), literature agrees on a reduced lending pace by financial institutions (FIs) as a result of stricter capital regulations. At the same time, an increasing volume of outstanding loans, directed even to advanced countries, characterize the balance sheet of several multilateral development banks (MDBs). Design/methodology/approach This paper observes how a different degree of banking regulation might have shaped the economic response to the GFC by FIs and MDBs. Findings The authors indicate that MDBs’ financing, with a coherent objective of countercyclical support to the economies hit by the GFC, seems to have filled a market gap caused by the FIs’ pro-cyclical lending reduction. Originality/value While a controversial issue is whether Basel standards should be imposed on MDBs, a harmonization amongst MDBs of their transparency and reporting standards might be beneficial: some preliminary consideration has been portrayed.

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

Cited by 14 publications

References 20 publications

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

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

A Prudential trade-off? Leakages and Interactions with Monetary Policy*

The regulation of multilateral development banks: is it needed? A preliminary analysis

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