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Risk redistribution under borrower-based macroprudential measures: analysing the role of financial advisors
Borrower-based macroprudential measures (BBMs) are widely used to curb financial stability risks stemming from excessive retail loan growth. Yet, micro-level evidence remains scarce due to data limitations. This policy brief reports on new results...
The paper analyzes how foreign claims of international banking groups evolve and what factors stabilize them. It looks at 76 banking groups from the Global Systemically Important Banks (G-SIB) assessment in 2020, studying their foreign claims from 2000 to 2022. The study finds that during systemic crises, banks with more local claims in local currency (loans to residents in the country’s currency) see a smaller drop in foreign claims. Specifically, increasing local claims in local currency by one standard deviation reduces the drop in foreign claims by 0.11 standard deviations during a crisis. The paper also indicates that increasing local claims in local currency helps stabilize foreign claims during periods of stock market volatility.
This paper is part of the Banking Supervision Policy Working Paper Series in the context of the SSM-EUI partnership on SSM Banking Supervision Learning Services. Read more.