Macroprudential policy and intra-group dynamics: The effects of reserve requirements in Brazil

Chris Becker, Matias Ossandon Busch and Lena Tonzer

Journal of Corporate Finance, 2021, vol. 71, issue C

Abstract: We examine whether liquidity dynamics within banking groups matter for the transmission of macroprudential policy. Using matched bank headquarters-branch data for identification, we find a lending channel of reserve requirements for municipal branches whose headquarters are more exposed to the policy tool. The result is driven by the 2008–2009 crisis and is stronger for state-owned branches, especially when being less profitable and liquidity constrained. These findings suggest the presence of cross-regional distributional effects of macroprudential policies operating via internal capital markets.

Keywords: Macroprudential regulation; Financial intermediation; Intra-group dynamics (search for similar items in EconPapers)
JEL-codes: F30 F65 G21 G28 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Working Paper: Macroprudential policy and intra-group dynamics: The effects of reserve requirements in Brazil (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:71:y:2021:i:c:s0929119921002182

DOI: 10.1016/j.jcorpfin.2021.102096

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