March 2017 issue contents
International Banking and Cross-Border Effects of Regulation: Lessons from Switzerland

by Simone Auer, Maja Ganarin, and Pascal Towbin
Swiss National Bank


As part of the IBRN initiative on prudential spillovers, we study the effects of changes in foreign prudential measures on banks in Switzerland. For the average bank we find no evidence that the foreign prudential measures considered affect domestic lending growth or foreign funding growth. Meanwhile, the effects of foreign prudential measures differ across banks with different balance sheet characteristics. In particular, changes in foreign capital regulations do have significant effects on the domestic lending growth of banks with unfavorable liquidity positions (low core deposit ratios or high illiquid asset ratios). However, these effects remain quantitatively small, relative to the overall variability of lending growth.

JEL Codes: F42, G21, G28.

Full article (PDF, 29 pages, 274 kb)