When the cat’s away the mice will play": Does regulation at home affect bank risk-taking abroad?
Ongena,S. Popov,A. Udell,G.F.
Ongena,S.
Popov,A.
Udell,G.F.
Abstract
This paper provides the first empirical evidence that bank regulation is associated with cross-border spillover effects through the lending activities of large multinational banks. We analyze business lending by 155 banks to 9,613 firms in 1,976 different localities across 16 countries. We find that lower barriers to entry, tighter restrictions on bank activities, and to a lesser degree higher minimum capital requirements in domestic markets are associated with lower bank lending standards abroad. The effects are stronger when banks are less efficiently supervised at home, and are observed to exist independently from the impact of host-country regulation.
Description
Date
2013
Journal Title
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Volume Title
Publisher
Research Projects
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Keywords
SDG 10 - Reduced Inequalities
Citation
Ongena, S, Popov, A & Udell, G F 2013, 'When the cat’s away the mice will play" : Does regulation at home affect bank risk-taking abroad?', Journal of Financial Economics, vol. 108, no. 3, pp. 727-750.