Cross-border effects of regulatory spillovers: evidence from Mexico

Jagdish Tripathy ()
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Jagdish Tripathy: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 684, Bank of England working papers from Bank of England

Abstract: I study the spillover of a macroprudential regulation in Spain to the Mexican financial system via Mexican subsidiaries of Spanish banks. The spillover caused a drop in the supply of household credit in Mexico. Municipalities with a higher exposure to Spanish subsidiaries experienced a larger contraction in household credit. These localized contractions caused a drop in macroeconomic activity in the local non-tradable sector. Estimates of the elasticity of loan-demand by the non-tradable sector to changes in household credit supply range from 1.6–3.5. These results emphasize the potential for cross-border effects of regulations in the presence of global banks.

Keywords: Regulatory spillovers; capital shock; household credit (search for similar items in EconPapers)
JEL-codes: F36 F42 G21 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2017-10-20
New Economics Papers: this item is included in nep-ban and nep-cba
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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