Cross-Border Regulatory Spillovers: How Much? How Important? What Sectors? Lessons from the United Kingdom

Cross-Border Prudential Policy Spillovers: How Much? How Important? Evidence from the International Banking Research Network

“…These data will be considered in comparable baseline specifications implemented by all country teams. The observations on the loan data accord with the perspective of the specification 8The studies included in this IBRN initiative on the impact of prudential instrument changes on the activities of global banks include: Auer, Ganarin, and Towbin (2016) for Switzerland; Avdjiev, Koch, Mcguire, and von Peter(2016) using international data; Berrospide, Correa, Goldberg, and Niepmann (2016) for the US; Başkaya, Binici, and Kenç (2016) for Turkey; Bonfim and Costa (2016) for Portugal; Bussière, Schmidt, and Vinas (2016) for France; Caccavaio, Carpinelli, and Marinelli (2016) for Italy; Damar and Mordel (2016) for Canada; Frost, de Haan, and van Horen (2016) for the Netherlands; Gajewski and Krzesicki (2016) for Poland; Hills, Reinhardt, Sowerbutts, and Wieladek (2016) for the UK; Ho, Wong, and Tan (2016) for Hong Kong; Jara and Cabezas (2016) for Chile; Levin, López, López-Gallo, and Martínez (2016); Nocciola and Żochowski (2016) using international data; Ohls, Pramor, and Tonzer (2016) for Germany; and Park and Lee (2016) for Korea.…”

“…Some of the studies by teams also underscore how the unit of observation -total loans -of the baseline work used in the meta-analysis is likely to understate some important international spillovers of prudential policies. For example, results for the United Kingdom emphasize the importance of using sectorally disaggregated data (Hills et al 2016). As an illustration, tightening in LTV ratios in the home market of parents outside the U.K. leads to an increase in lending to private non-financials and households in the U.K.…”