On a tight leash: does bank organisational structure matter for macroprudential spillovers?

Piotr Danisewicz (), Dennis Reinhardt and Rhiannon Sowerbutts ()
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Piotr Danisewicz: Lancaster University
Rhiannon Sowerbutts: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH

No 524, Bank of England working papers from Bank of England

Abstract: This paper examines whether cross-border spillovers of macroprudential regulation depend on the organisational structure of banks’ foreign affiliates. Our analysis compares the response of foreign banks’ branches versus subsidiaries in the United Kingdom to changes in macroprudential regulations in foreign banks’ home countries. By focusing on branches and subsidiaries of the same banking group, we are able to control for all the factors affecting parent banks’ decisions regarding the lending of their foreign affiliates. We document that there are important differences between the type of regulation and the type of lending. Following a tightening of capital regulation, branches of multinational banks reduce interbank lending growth by 6 percentage points more relative to subsidiaries of the same banking group. Lending to non-banks does not exhibit such differences. A tightening in lending standards or reserve requirements at home does not have differential effects on both interbank and non-bank lending in the United Kingdom.

Keywords: Macro prudential regulation; cross-border lending; credit supply; foreign banks organisational structure (search for similar items in EconPapers)
JEL-codes: E51 E58 G21 G28 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-02-20
New Economics Papers: this item is included in nep-ban, nep-cba, nep-ifn, nep-mac, nep-mfd and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: On a tight leash: Does bank organizational structure matter for macroprudential spillovers? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0524

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