Crisis, contagion and international policy spillovers under foreign ownership of banks

Marcin Kolasa, Krzysztof Makarski and Michal Brzoza-Brzezina

No 595, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: This paper checks how international spillovers of shocks and polices are modified when banks are foreign owned. We build a two-country DSGE model with banking sectors that are owned by residents of one (big and foreign) country. Consistently with empirical findings we find that foreign ownership of banks amplifies spillovers from foreign shocks. Moreover, it also strenghtens the international transmission of monetary and macroprudential policies. Finaly, we replicate the financial crisis in the euro area and show how, by preventing bank capital outflow in 2009 Polish regulatory authorities managed to reduce its spillover to Poland. We also show that under foreign bank ownership such policy is strongly prefered to a recapitalization of domestic banks.

Date: 2015
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-mac, nep-mon and nep-tra
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Related works:
Journal Article: Crisis, contagion and international policy spillovers under foreign ownership of banks (2018)
Working Paper: Crisis, contagion and international policy spillovers under foreign ownership of banks (2017)
Working Paper: Crisis, contagion and international policy spillovers under foreign ownership of banks (2016)
Working Paper: Crisis, contagion and international policy spillovers under foreign ownership of banks (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:595

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