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This paper sheds new light on the degree of international fiscal-financial spillovers by investigating the effect of domestic fiscal policies on cross-border bank lending. By estimating the dynamic response of U.S. cross-border bank lending towards the 45 recipient countries to exogenous domestic fiscal shocks (both measured by spending and revenue) between 1990Q1 and 2012Q4, we find that expansionary domestic fiscal shocks lead to a statistically significant increase in cross-border bank lending. The magnitude of the effect is also economically significant: the effect of 1 percent of GDP increase (decrease) in spending (revenue) is comparable to an exogenous decline in the federal funds rate. We also find that fiscal shocks tend to have larger effects during periods of recessions than expansions in the source country, and that the adverse effect of a fiscal consolidation is larger than the positive effect of the same size of a fiscal expansion. In contrast, we do not find systematic and statistically significant differences in the spillover effects across recipient countries depending on their exchange rate regime, although capital controls seem to play some moderating role. The extension of the analysis to a panel of 16 small open economies confirms the finding from the U.S. economy.

Fiscal policy. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Foreign Exchange --- Fiscal Policy --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- International Policy Coordination and Transmission --- International Lending and Debt Problems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- National Government Expenditures and Related Policies: General --- Externalities --- Banking --- Monetary economics --- Public finance & taxation --- Currency --- Foreign exchange --- Cross-border banking --- Bank credit --- Fiscal stimulus --- Expenditure --- Spillovers --- Financial services --- Money --- Fiscal policy --- Financial sector policy and analysis --- Exchange rate arrangements --- International finance --- Credit --- Expenditures, Public --- United States

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Using data collected from pan-African banks’ (PABs), balance sheets and other sources (Orbis, Fitch), this study identifies some key patterns of cross-border investment in bank subsidiaries by key banking groups in sub-Saharan Africa (SSA) and discusses some of the determinants of this investment. Using a gravity model relating the annual value of a banking group’s investment in the net equity of its subsidiaries to a set of explanatory variables, the analysis finds that cross-border banking is in part driven by a search for yield, diversification, and expansion for strategic reasons.

Banks and banking, International. --- International banking --- Offshore banking (Finance) --- Transnational banking --- Financial institutions, International --- International finance --- Banks and Banking --- Foreign Exchange --- Inflation --- Investments: Stocks --- Econometrics --- Current Account Adjustment --- Short-term Capital Movements --- International Monetary Arrangements and Institutions --- International Lending and Debt Problems --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Econometric Modeling: General --- Banking --- Currency --- Foreign exchange --- Macroeconomics --- Investment & securities --- Econometrics & economic statistics --- Exchange rates --- Cross-border banking --- Stocks --- Financial services --- Prices --- Financial institutions --- Gravity models --- Econometric analysis --- Banks and banking --- Econometric models --- South Africa

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This Selected Issues paper presents an overview of the cross-border expansion of Moroccan banks in sub-Saharan Africa (SSA). It discusses policies to minimize possible negative spillovers and address the main supervisory challenges. It builds on the analysis and main results of a Pan-African Cross-Border Exercise—a joint initiative by the IMF’s African and Monetary and Capital Markets departments, with the collaboration of the Middle East and Central Asia department. It highlights that that Morocco could play an instrumental role by providing technical assistance to other supervisors in the region, and the SSA region may benefit from the Moroccan experience of good practices in many areas and relatively advanced supervisory capacity.

Economic development -- Morocco. --- International Monetary Fund -- Morocco. --- Morocco -- Economic policy. --- Economic History --- Business & Economics --- Banks and Banking --- Banking --- Finance: General --- Money and Monetary Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- International Lending and Debt Problems --- General Financial Markets: Government Policy and Regulation --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banking law --- Finance --- Monetary economics --- Cross-border banking --- Commercial banks --- Bank legislation --- Financial services --- Financial regulation and supervision --- Financial institutions --- Financial sector stability --- Financial sector policy and analysis --- Credit --- Money --- Banks and banking --- International finance --- Financial services industry --- Law and legislation --- Morocco

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This paper analyzes cross-border macrofinancial spillovers from a variety of macroprudential policy measures, using a range of quantitative methods. Event study and panel regression analyses find that liquidity and sectoral macroprudential policy measures often affect cross-border bank credit, whereas capital measures do not. This empirical evidence is stronger for tightening than for loosening measures, is distributed across credit leakage and reallocation effects, and is generally regionally concentrated. Consistently, structural model based simulation analysis indicates that output and bank credit spillovers from sectoral macroprudential policy shocks are generally small worldwide, but are regionally concentrated and economically significant for countries connected by strong trade or financial linkages. This simulation analysis also indicates that countercyclical capital buffer adjustments have the potential to generate sizeable regional spillovers.

Financial risk management --- Macroeconomics --- Economics --- Risk management --- E-books --- Financial risk management. --- Macroeconomics. --- Banks and Banking --- Money and Monetary Policy --- International Policy Coordination and Transmission --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Financial Markets and the Macroeconomy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- International Lending and Debt Problems --- Externalities --- Monetary economics --- Banking --- Macroprudential policy --- Bank credit --- Macroprudential policy instruments --- Cross-border banking --- Spillovers --- Financial sector policy and analysis --- Money --- Financial services --- Economic policy --- Credit --- International finance --- Sweden

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This paper analyses the nature of the increasing regionalization process in global banking. Despite the large decline in aggregate cross-border banking lending volumes, some parts of the global banking network are currently more interlinked regionally than before the Global Financial Crisis. After developing a simple theoretical model capturing banks' internationalization decisions, our estimation shows that this regionalization trend is present even after controlling for traditional gravitational variables (e.g. distance, language, legal system, etc.), especially among lenders in EMs and non-core banking systems, such as Australia, Canada, Hong Kong, and Singapore. Moreover, this regionalization trend was present before the GFC, but it has increased since then, and it seems to be associated with regulatory variables and the opportunities created by the retrenchment of several European lenders.

Monetary policy. --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Financial Risk Management --- International Lending and Debt Problems --- Financial Aspects of Economic Integration --- International Finance: Other --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financial Crises --- Banking --- Monetary economics --- Economic & financial crises & disasters --- Foreign banks --- Bank credit --- Cross-border banking --- Global financial crisis of 2008-2009 --- Financial institutions --- Money --- Financial services --- Financial crises --- Banks and banking --- Banks and banking, Foreign --- Credit --- International finance --- Global Financial Crisis, 2008-2009 --- United States