How Do CCyBs Travel? Internal Capital Markets & Domestic Borrowing

Björn Imbierowicz, Axel Loeffler, Steven Ongena and Ursula Vogel
Additional contact information
Björn Imbierowicz: Deutsche Bundesbank
Axel Loeffler: Deutsche Bundesbank; Deutsche Bundesbank
Steven Ongena: University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)
Ursula Vogel: Deutsche Bundesbank

No 26-56, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Macroprudential capital buffers are meant to contain risk inside the activating jurisdiction. We show how they travel through multinational firms. Exploiting staggered countercyclical capital buffer (CCyB) activations in host countries of German multinationals' foreign subsidiaries, we trace a firm-side leakage channel. Subsidiary bank credit contracts by 10.6 percent per percentage-point CCyB, and falls relative to nonbank credit within the same borrower and quarter; subsidiary total borrowing shows no detectable change across creditor domiciles. German parents replace the lost credit with internal debt and refinance at home, raising the credit-weighted default risk of German lenders' exposure to these groups by about 20 percent of its mean. The affected multinational groups owe German lenders 26 billion euros, the exposure base on which this rerouting operates. With no German CCyB active, risk returns home.

Keywords: multinational corporation; internal capital market; countercyclical capital buffer; banks; nonbanks (search for similar items in EconPapers)
JEL-codes: F23 F34 F36 G21 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2026-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7282618 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2656

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().