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

40 Pages Posted: 5 Oct 2016

See all articles by Jana Ohls

Jana Ohls

Deutsche Bundesbank

Marcus Pramor

Deutsche Bundesbank

Lena Tonzer

Halle Institute for Economic Research

Date Written: 2016

Abstract

We analyze the inward and outward transmission of regulatory changes through German banks' (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments, these spillovers are however quite heterogeneous between types of banks and can only be observed for some instruments. For instance, foreign banks located in Germany reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements and loan to value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements was effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions.

Keywords: cross-border spillovers, prudential regulation, loan supply, German banks

JEL Classification: F30, G01, G21, G28

Suggested Citation

Ohls, Jana and Pramor, Marcus and Tonzer, Lena, International Banking and Cross-Border Effects of Regulation: Lessons from Germany (2016). Bundesbank Discussion Paper No. 27/2016, Available at SSRN: https://ssrn.com/abstract=2848040 or http://dx.doi.org/10.2139/ssrn.2848040

Jana Ohls (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Marcus Pramor

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Lena Tonzer

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06018 Halle, 06108
Germany

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