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on International Finance |
| By: | Jose M. Berrospide; Ricardo Correa; Linda S. Goldberg; Friederike Niepmann |
| Abstract: | Domestic prudential regulation can have unintended effects across borders and may be less effective in an environment where banks operate globally. Using U.S. micro-banking data for the first quarter of 2000 through the third quarter of 2013, this study shows that some regulatory changes indeed spill over. First, a foreign country's tightening of limits on loan-to-value ratios and local currency reserve requirements increase lending growth in the United States through the U.S. branches and subsidiaries of foreign banks. Second, foreign tightening of capital requirements shifts lending by U.S. global banks away from the country where the tightening occurs to the United States and to other countries. Third, tighter U.S. capital regulation reduces lending by large U.S. global banks to foreign residents. |
| Keywords: | Macroprudential policies ; International banking ; Bank credit ; Spillovers |
| JEL: | F42 F44 G15 G21 |
| Date: | 2016–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1180&r=ifn |
| By: | He, Zhiguo (University of Chicago); Krishnamurthy, Arvind (Stanford University); Milbradt, Konstantin (Northwestern University) |
| Abstract: | U.S. government bonds are considered to be the world's safe store of value, especially during periods of economic turmoil such as the events of 2008. But what makes U.S. government bonds "safe assets?" We highlight coordination among investors, and build a model in which two countries with heterogeneous sizes issue bonds that may be chosen as safe asset. Our model illustrates the benefit of a large absolute debt size as safe asset investors have "nowhere else to go" in equilibrium, and the large country's bonds are chosen as the safe asset. Moreover, the effect becomes stronger in crisis periods. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3421&r=ifn |