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

24 Pages Posted: 17 Sep 2016

See all articles by Jon Frost

Jon Frost

Bank for International Settlements; University of Cambridge - Cambridge Centre for Alternative Finance

Jakob de Haan

CESifo (Center for Economic Studies and Ifo Institute); University of Groningen - Faculty of Economics and Business

Neeltje van Horen

Bank of England; Centre for Economic Policy Research (CEPR)

Date Written: September 15, 2016

Abstract

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 25 Dutch banks in 63 countries over 2000-2013 indicates that Dutch banks increase lending in countries that tighten prudential regulation. This result is driven particularly by larger banks; 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 sub-samples. 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.

Keywords: macroprudential policies, international banking, bank credit, spillovers

JEL Classification: F42, F44, G15, G21

Suggested Citation

Frost, Jon and de Haan, Jakob and van Horen, Neeltje, International Banking and Cross-Border Effects of Regulation: Lessons from the Netherlands (September 15, 2016). De Nederlandsche Bank Working Paper No. 520, Available at SSRN: https://ssrn.com/abstract=2839791 or http://dx.doi.org/10.2139/ssrn.2839791

Jon Frost (Contact Author)

Bank for International Settlements ( email )

Basel
Switzerland

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Jakob De Haan

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

Neeltje Van Horen

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

HOME PAGE: http://https://www.bankofengland.co.uk/research/Researchers/neeltje-van-horen

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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