Template-Type: ReDIF-Paper 1.0 
Title: Crisis, contagion and international policy spillovers under foreign ownership of banks
Author-Name: Michał Brzoza-Brzezina 
Author-Name: Marcin Kolasa 
Author-Name: Krzysztof Makarski 
Abstract: This paper checks how international spillovers of shocks and policies are modified whenbanks are foreign owned. To this end we build a two-country macroeconomic modelwith banking sectors that are owned by residents of one (big and foreign) country.Consistently with empirical findings, in our model foreign ownership of banks amplifies spillovers from foreign shocks. It also strenghtens the international transmissionof monetary and macroprudential policies. We next use the model to replicate thefinancial crisis in the euro area and show how, by preventing bank capital outow in2009, the Polish regulatory authorities managed to reduce its contagion to Poland.We also find that under foreign bank ownership such policy is strongly prefered to arecapitalization of domestic banks.
Number: 2016-003
Length: 25 pages 
Creation-Date: 2016-03
Keywords: foreign-owned banks, monetary and macroprudential policy, international spillovers, DSGE models with banking
Classification-JEL: E32, E44, E58
File-URL: https://hdl.handle.net/20.500.12182/1085
File-Format: Application/pdf
DOI: 10.33119/kaewps2016003
Handle: RePEc:sgh:kaewps:2016003