Cross-border Banking and the Circumvention of Macroprudential and Capital Control Measures

We analyze the joint impact of macroprudential and capital control measures on cross-border banking flows, while controlling for multidimensional aspects in lender-and-borrower-relationships (e.g., distance, cultural proximity, microprudential regulations). We uncover interesting spillover effects f...

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Bibliographic Details
Main Author: Cerutti, Eugenio
Other Authors: Zhou, Haonan
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2018
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Cross-border Banking and the Circumvention of Macroprudential and Capital Control Measures  |c Eugenio Cerutti, Haonan Zhou 
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300 |a 46 pages 
651 4 |a United States 
653 |a International finance 
653 |a Economic policy 
653 |a Depository Institutions 
653 |a Credit 
653 |a Cross-border banking 
653 |a Banks 
653 |a Banks and banking 
653 |a Financial sector policy and analysis 
653 |a Monetary economics 
653 |a Financial services 
653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
653 |a Micro Finance Institutions 
653 |a Balance of payments 
653 |a Long-term Capital Movements 
653 |a Exports and Imports 
653 |a Mortgages 
653 |a International economics 
653 |a International Lending and Debt Problems 
653 |a Money 
653 |a International Financial Markets 
653 |a International Policy Coordination and Transmission 
653 |a Capital controls 
653 |a Banks and Banking 
653 |a Financial Markets and the Macroeconomy 
653 |a Bank credit 
653 |a Macroeconomics 
653 |a Banking 
653 |a Capital movements 
653 |a Macroprudential policy 
653 |a Money and Monetary Policy 
653 |a Macroprudential policy instruments 
653 |a International Investment 
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520 |a We analyze the joint impact of macroprudential and capital control measures on cross-border banking flows, while controlling for multidimensional aspects in lender-and-borrower-relationships (e.g., distance, cultural proximity, microprudential regulations). We uncover interesting spillover effects from both types of measures when applied either by lender or borrowing countries, with many of them most likely associated with circumvention or arbitrage incentives. While lender countries’ macroprudential policies reduce direct cross-border banking outflows, they are associated with larger outflows through local affiliates. Direct cross-border inflows are higher in borrower countries with more usage of macroprudential policies, and are linked to circumvention motives. In the case of capital controls, most spillovers seem to be present through local affiliates. We do not find evidence to support the idea that additional capital inflow controls could interact with macro-prudential policies to mitigate cross-border spillovers