The International Transmission of Monetary Policy Through Financial Centres: Evidence from the United Kingdom and Hong Kong

Hills, Robert; Ho, Kelvin; Reinhardt, Dennis; Sowerbutts, Rhiannon; Wong, Eric; Wu, Gabriel

doi:10.2139/ssrn.3053810

Cited by 3 publications

(3 citation statements)

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“…In contrast, Hills et al. (2019) establish evidence for the bank funding and bank portfolio channel in the transmission of foreign monetary policies in Hong Kong and the United Kingdom, as do Barbosa et al. (2018) for Ireland and Portugal.…”

Section: Introductionmentioning

confidence: 99%

“…The second channel brought forward is the portfolio channel that has different predictions regarding domestic lending. A tightening of foreign monetary policy may reduce the creditworthiness of foreign borrowers and reduce their collateral values, which may induce banks to reshuffle their portfolios away from foreign assets and toward domestic assets (see Barbosa et al, 2018; Hills et al, 2019), hence increase domestic lending. This channel has been also called the international substitution effect in Avdjiev et al (2018).…”

Section: Introductionmentioning

confidence: 99%

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The interaction between macroprudential and monetary policies: The cases of Norway and Sweden

Cao¹,

Dinger

Grodecka‐Messi

et al. 2020

Rev International Economics

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The interaction between macroprudential and monetary policies: The cases of Norway and Sweden

Cao¹,

Dinger

Grodecka‐Messi

et al. 2020

Rev International Economics

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“…In particular, exploring the cross‐border transmission of monetary policy in two major international financial centres (the UK and Hong Kong), Hills et al. (2019) establish evidence for both the bank funding and portfolio channels. Focusing on French and Italian banks, Caccavaio et al.…”

Section: Introductionmentioning

confidence: 99%

Le Pont de Londres: Interactions between monetary and prudential policies in cross‐border lending

Bussière

Hills

Lloyd

et al. 2020

Rev International Economics

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We examine how euro area (EA) monetary policy and recipient-country prudential policy interact to influence cross-border lending of French banks. We find that monetary spillovers via cross-border lending can be partially offset by prudential measures in receiving countries. We then explore heterogeneities, specifically by bank size and location of the affiliate (French HQ vs. affiliates based in the UK). We find that the response of lending from French HQ to EA monetary policy is less sensitive to recipient-country prudential policy for systemic banks (GSIBs) than for non-GSIBs'. In contrast, the response of lending from GSIBs' affiliates in the UK is sensitive to recipient-country prudential policy. French GSIBs' crossborder lending from French HQ responds differently than lending from international financial centres. We also find evidence that French GSIBs channel funds towards the UK in response to EA monetary policy, in a manner dampened by global prudential policy setting. These findings suggest the existence of a 'London Bridge': conditional on EA monetary policy, French GSIBs adjust their funds in the UK depending on global prudential policies and, from there, lend to third-party countries according to local prudential policies. Finally, we have similar findings for all EA-owned banks UK affiliates, suggesting a broader relevance for the London Bridge.

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International spillovers of monetary policy through global banks: introduction to the special issue

Buch

Bussière

Chinn³

et al. 2019

Journal of International Money and Finance

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The International Transmission of Monetary Policy Through Financial Centres: Evidence from the United Kingdom and Hong Kong

Cited by 3 publications

References 0 publications

The interaction between macroprudential and monetary policies: The cases of Norway and Sweden

The interaction between macroprudential and monetary policies: The cases of Norway and Sweden

Le Pont de Londres: Interactions between monetary and prudential policies in cross‐border lending

International spillovers of monetary policy through global banks: introduction to the special issue

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