Abstract
In this paper we study how foreign lending by Italian banks adjust to prudential policy changes of destination markets over the period 2000-14. We find a positive prudential spillover effect: Italian banks tend to lend more to countries that tighten a prudential measure. The impact is not very large nevertheless, and it is driven by cross-border lending and lending by hosted branches that are not directly affected by the changes in regulations. This evidence highlights the need for international cooperation among authorities.
Authors
- Marianna Caccavaio
- Luisa Carpinelli
- Giuseppe Marinelli
JEL codes
- G20
- G21