Abstract

http://ssrn.com/abstract=2020906
 
 

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'When the Cat's Away the Mice Will Play': Does Regulation at Home Affect Bank Risk Taking Abroad?


Alexander A. Popov


European Central Bank (ECB)

Steven Ongena


University of Zurich and SFI

Gregory F. Udell


Indiana University - Kelley School of Business - Department of Finance

March 13, 2012

AFA 2013 San Diego Meetings Paper

Abstract:     
This paper provides the first empirical evidence that bank regulation is associated with cross-border spillover effects through the lending activities of large multinational banks. We analyze business lending by 155 banks to 9613 firms in 1976 different localities across 16 countries. We find that lower barriers to entry, tighter restrictions on bank activities, and higher minimum capital requirements in domestic markets are associated with lower bank lending standards abroad. The effects are stronger when banks are less efficiently supervised at home, and are observed to exist independently from the impact of host-country regulation.

Number of Pages in PDF File: 60

Keywords: bank regulation, cross-border financial institutions, lending standards, financial risk

JEL Classification: G21, G28, G32

working papers series


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Date posted: March 14, 2012  

Suggested Citation

Popov, Alexander A. and Ongena, Steven and Udell, Gregory F., 'When the Cat's Away the Mice Will Play': Does Regulation at Home Affect Bank Risk Taking Abroad? (March 13, 2012). AFA 2013 San Diego Meetings Paper. Available at SSRN: http://ssrn.com/abstract=2020906 or http://dx.doi.org/10.2139/ssrn.2020906

Contact Information

Alexander A. Popov (Contact Author)
European Central Bank (ECB) ( email )
Kaiserstrasse 29
Frankfurt am Main, D-60311
Germany
Steven R. G. Ongena
University of Zurich and SFI ( email )
Plattenstrasse 14
Zürich, 8032
Switzerland
Gregory F. Udell
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

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