IMF Working Paper: Cross-border Banking and the Circumvention of Macroprudential and Capital Control Measures

Authors: Eugenio M Cerutti and Haonan Zhou Date: September 2018 Abstract: We analyze the joint impact of macroprudential and capital control measures on cross-border banking flows, while controlling for multidimensional aspects in lender-and-borrower-relationships (e.g., distance, cultural proximity, microprudential regulations). We uncover interesting spillover effects from both types of measures when applied either by lender or[…]

BIS Working Paper: What drives local lending by global banks?

Authors: Stefan Avdjiev, Uluc Aysun and Ralf Hepp Date: September 2018 Abstract: We find that the lending behaviour of global banks’ subsidiaries throughout the world is more closely related to local macroeconomic conditions and their financial conditions than to those of their owner-specific counterparts. This inference is drawn from a panel dataset populated with bank-level[…]

NBER Working Paper: International Spillovers and ‘Ex-ante’ Efficient Bailouts

Authors: Marina Azzimonti, and Vincenzo Quadrini Date: September 2018 Abstract: We study how cross-country macroeconomic spillovers caused by sovereign default affect equilibrium bailouts. Because of portfolio diversification, the default of one country causes a macroeconomic contraction also in other countries. This generates a self-interest for these other countries to bailout the defaulting country. A novel[…]

NBER Working Paper: The Costs of Macroprudential Policy

Authors: Björn Richter, Moritz Schularick, and Ilhyock Shim Date: September 2018 Abstract: Central banks increasingly rely on macroprudential measures to manage the financial cycle. However, the effects of such policies on the core objectives of monetary policy to stabilise output and inflation are largely unknown. In this paper, we quantify the effects of changes in[…]

BIS Working Paper: Financial stress in lender countries and capital outflows from emerging market economies

Authors: Ilhyock Shim, and Kwanho Shin Date: September 2018 Abstract: We investigate if financial stress in countries where international banks are headquartered is a major driver of banking outflows from emerging market economies (EMEs). We find that when financial stress measured by sovereign or bank CDS spread or corporate bond spread increases, international banks decrease[…]

CEPR Discussion Paper: Banks Defy Gravity in Tax Havens

Authors: Vincent Bouvatier, Gunther Capelle-blancard, and Anne-Laure Delatte Date: September 2018 Abstract: This paper provides the first quantitative assessment of the contribution of global banks in intermediating tax evasion. Applying gravity equations on a unique regulatory dataset based on comprehensive individual country-by-country reporting from all the Systemically Important Banks the European Union, we find that:[…]

IMF Working Paper: Who Pays for Financial Crises? Price and Quantity Rationing of Different Borrowers by Domestic and Foreign Banks

Authors: Allen N. Berger, Tanakorn Makaew, and Rima Turk-Ariss Date: July 2018 Abstract: Financial crises result in price and quantity rationing of otherwise creditworthy business borrowers, but little is known about the relative severity of these two types of rationing, which borrowers are rationed most, and the roles of foreign and domestic banks. Using a[…]

CEPR Discussion Paper: Bank Resolution and the Structure of Global Banks

Authors: Patrick Bolton, and Martin Oehmke Date: July 2018 Abstract: We study the resolution of global banks by national regulators. Single-point-of-entry (SPOE) resolution, where loss-absorbing capital is shared across jurisdictions, isefficient but may not be implementable. First, when expected transfers across jurisdictions are too asymmetric, national regulators fail to set up SPOE resolution ex ante.[…]