 Le Pont de Londres: Interactions between monetary and prudential policies in cross‐border lendingMatthieu Bussiere, Robert Hills, Simon Lloyd, Baptiste Meunier, Justine Pedrono, Dennis Reinhardt and Rhiannon Sowerbutts Review of International Economics, 2021, vol. 29, issue 1, 61-86 Abstract: Using two unique confidential datasets summarizing the cross‐border lending of banks in France and the UK, we examine whether recipient‐country prudential policies can help to reduce the spillover effects of euro‐area (EA) monetary policy. We address this question from a novel angle, focused on the role of international financial centres, by considering differences in bank size and location (lending from French headquarters vs. from French affiliates located in the UK). For small French banks that lack a presence in international financial centres, the response of direct cross‐border lending from France to EA monetary policy is partially offset by recipient‐country prudential policy. For larger banks, however, the offsetting effect applies only to lending that passes through foreign affiliates located in London. This suggests the existence of a “London Bridge”: banks adapt their flows to the UK conditional on EA monetary policy and global prudential policies; and from their UK affiliates to third‐party countries in a manner that depends on local prudential settings. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:29:y:2021:i:1:p:61-86 Ordering information: This journal article can be ordered from Access Statistics for this article Review of International Economics is currently edited by E. Kwan Choi More articles in Review of International Economics from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.