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Cross-border effects of regulatory spillovers: evidence from Mexico

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  • Tripathy, Jagdish

    (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.

Suggested Citation

  • Tripathy, Jagdish, 2017. "Cross-border effects of regulatory spillovers: evidence from Mexico," Bank of England working papers 684, Bank of England.
    • Handle: RePEc:boe:boeewp:0684
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    References listed on IDEAS

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    Cited by:

    1. Claudio Borio & Ilhyock Shim & Hyun Song Shin, 2023. "Macro-Financial Stability Frameworks: Experience and Challenges," World Scientific Book Chapters, in: Claudio Borio & Edward S Robinson & Hyun Song Shin (ed.), MACRO-FINANCIAL STABILITY POLICY IN A GLOBALISED WORLD: LESSONS FROM INTERNATIONAL EXPERIENCE Selected Papers from the Asian Monetary Policy Forum 202, chapter 3, pages 2-49, World Scientific Publishing Co. Pte. Ltd..

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    More about this item

    Keywords

    Regulatory spillovers; capital shock; household credit;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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