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

46 Pages Posted: 2 Dec 2016 Last revised: 24 Sep 2017

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: 2016-11-01

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 data set 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.

Keywords: international banking, macroprudential, regulation, spillovers, lending

JEL Classification: F34, G01, G21

Suggested Citation

Buch, Claudia M. and Goldberg, Linda S., Cross-Border Prudential Policy Spillovers: How Much? How Important? Evidence from the International Banking Research Network (2016-11-01). FRB of NY Staff Report No. 801. Available at SSRN: https://ssrn.com/abstract=2879278

Claudia M. Buch (Contact Author)

Deutsche Bundesbank ( email )

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

Linda S. Goldberg

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2836 (Phone)
212-720-6831 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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