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Cross-country spillovers from macroprudential regulation: Reciprocity and leakage

Rubio, Margarita



In a globally interconnected banking system, there can be spillovers from domestic macroprudential policies to foreign banks and vice versa, for example, through the presence of foreign branches in the domestic economy. The lack of reciprocity of some macroprudential instruments may result in an increase in bank ‡ows to those banks with lower regulatory levels, a phenomenon known as "leakage." This may decrease the e¤ectiveness of macroprudential policies in the pursuit of …nancial stability. To explore this topic, I consider a two-country DSGE model with housing and credit constraints. Borrowers can choose whether to borrow from domestic or foreign banks. Macroprudential policies are conducted at a national level and are represented by a countercyclical rule on the loan-to-value ratio. Results show that when there are some sort of reciprocity agreements on macroprudential policies across countries, …nancial stability and welfare gains are larger than in a situation of non reciprocity. An optimal policy analysis shows that, in order to enhance the e¤ectiveness of macroprudential policies, reciprocity mechanisms are desirable although the foreign macroprudential rule does not need to be as aggressive as the domestic one.


Rubio, M. (2020). Cross-country spillovers from macroprudential regulation: Reciprocity and leakage. Journal of International Money and Finance, 103,

Journal Article Type Article
Acceptance Date Dec 31, 2019
Online Publication Date Jan 7, 2020
Publication Date 2020-05
Deposit Date Jan 7, 2020
Publicly Available Date Jul 8, 2021
Journal Journal of International Money and Finance
Print ISSN 0261-5606
Electronic ISSN 1873-0639
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 103
Article Number 102134
Keywords Macroprudential Policies; Spillovers; Banking Regulation; Foreign Branches; Leakage; Loan-to-value JEL Classi…cation: E44; F34; F41
Public URL
Publisher URL
Additional Information This article is maintained by: Elsevier; Article Title: Cross-country spillovers from macroprudential regulation: Reciprocity and leakage; Journal Title: Journal of International Money and Finance; CrossRef DOI link to publisher maintained version:; Content Type: article; Copyright: © 2020 Elsevier Ltd. All rights reserved.


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