Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148141
Authors: 
Damar, H. Evren
Mordel, Adi
Year of Publication: 
2016
Series/Report no.: 
Bank of Canada Staff Working Paper 2016-34
Abstract: 
We study how changes in prudential requirements affect cross-border lending of Canadian banks by utilizing an index that aggregates adjustments in key regulatory instruments across jurisdictions. We show that when a destination country tightens local prudential measures, Canadian banks lend more to that jurisdiction, and the effect is particularly significant when capital requirements are tightened and weaker if banks lend mainly via affiliates. Our evidence also suggests that Canadian banks adjust foreign lending in response to domestic regulatory changes. The results confirm the presence of heterogeneous spillover effects of foreign prudential requirements.
Subjects: 
Financial system regulation and policies
Financial institutions
Financial stability
JEL: 
G01
F34
G21
Document Type: 
Working Paper

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