Cross-Border Bank Flows Eugenio Cerutti, Stijn Claessens and Lev - - PowerPoint PPT Presentation

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Cross-Border Bank Flows Eugenio Cerutti, Stijn Claessens and Lev - - PowerPoint PPT Presentation

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Global Liquidity and Drivers of Cross-Border Bank Flows Eugenio Cerutti, Stijn Claessens and Lev Ratnovski IMF International Banking: Microfoundations and Macroeconomic Implications Conference Amsterdam - June 13, 2014 Disclaimer! The views

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SLIDE 1

Global Liquidity and Drivers of Cross-Border Bank Flows

Eugenio Cerutti, Stijn Claessens and Lev Ratnovski

IMF

International Banking: Microfoundations and Macroeconomic Implications Conference Amsterdam - June 13, 2014

Disclaimer! The views presented here are those of the authors and do NOT necessarily reflect the views of the IMF or IMF policy

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SLIDE 2

PRESENTATION OUTLINE

 Motivation - Why Study Global Liquidity?  Literature and Data  Regression Results

  • Drivers of Global Liquidity
  • The Role of US vs. other G4 Drivers
  • Borrower Country Characteristics

 Conclusions/Policy Implications

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MOTIV ATION

 The financial cycle is increasingly global

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SLIDE 4

MOTIV ATION

 Due to deeper real and financial integration

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SLIDE 5

MOTIV ATION

 G4 banks intermediate much of global credit  So, funding conditions – ease of credit – within the G4

affects funding conditions globally

 Global Liquidity corresponds to G4 credit supply factors

that affect the provision of cross-border bank credit

 Using a large dataset (77 countries, 1990-2012) we:

  • Confirm earlier results (Rey, 2013; Bruno and Shin,

2014)

  • Similar results for cross-border lending to bank and

non-banks, but to banks more sensitive to GL drivers

  • Find that most of the relations appear in the 2000s’

financial globalization period

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SLIDE 6

KEY QUESTIONS / PREVIEW OF MAIN RESULTS

We also add to the literature through three questions:

 What G4 financial conditions are most relevant for GL?

Uncertainty (VIX), US monetary policy (term premia), and UK/EA bank conditions (leverage &TED spreads)

 Is GL US-driven, or do other G4 countries play a role?

Not just US, UK/EA bank conditions with key role

 How can borrower countries limit exposure to GL cycles?

Through better macro frameworks, bank supervision and regulation, and capital flows management

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SLIDE 7

DEFINITION OF GLOBAL LIQUIDITY

QS = Q (P, GL), where QS is the quantity of financing provided, P is the “price” (e.g. expected return differentials); GL is a vector of “non-price” supply factors in financial centers

Global Liquidity

Uncertainty Risk Aversion Funding Conditions G4 Monetary Policy Monetary Aggregates

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SLIDE 8

DRIVERS (AS IDENTIFIED BY LITERATURE W/ PROXIES)

1- Uncertainty and risk aversion

 Lenders’ and investors’ risk attitudes (risk-on/ risk-off

episodes). (Bekaert et al., 2013, Rey, 2013) US VIX 2- The funding conditions for global banks

 Banks’ ability, willingness to take on risks. TED spread

(short-term interbank minus and government bond rate). Leverage of US dealer banks (Adrian & Shin, 2010; Bruno & Shin, 2014)

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SLIDE 9

DRIVERS II (AS IDENTIFIED BY LITERATURE W/ PROXIES)

3- Money aggregates

 M2 may affect buoyancy of lending. Growth in

components such as wholesale or NFC’ deposits indicate ease of funding conditions (Hahm, Shin & Shin, 2013; Chung et al., 2014) 4- Monetary Policy in G4

 Level of rates (Altunbas et al., 2014; Borio and Zhu,

2012; Jimenez et al., 2014; Bruno and Shin, 2013, 2014). Slope of yield curve (domestic opportunities less when yield curve is flat; may trigger cross-border bank loans)

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SLIDE 10

DATA BIS International Banking Statistics (IBS), Locational

 A long time span 1990-2012, 77 borrowers, bank/non-bank

breakdown, and exchange rate adjusted (to capture changes in actual underlying positions) For each of G4 (US, UK, Euro Area, and Japan)

 VIX, TED spreads (3 month Libor minus 3 month govt

bond yield), US dealer bank and G4 bank leverage, real credit growth, real policy rate (policy rate deflated with CPI), slope of yield curve (10 year government bond yield minus 3 month government bond yield), growth in M2 Borrower country characteristics

  • Exch rate regime, capital controls, banking regulations, etc
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METHODOLOGY

Panel regression with country fixed effects and standard errors clustered at the borrower country level

 ∆Ljt is the quarterly log difference in the exchange rate

adjusted stock of bank claims in borrower country j at time t

 DomesticFactorjt are proxies for country j demand at t  ΔInterestSpreadjt is the change in the spread between

local lending rates and US Fed Funds Rate

 Global Liquidityt is the set of G4 global liquidity drivers  γj are country fixed effects

1 2 3 jt jt jt t j jt

L DomesticFactor InterestSpread GlobalLiquidity              

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SLIDE 12

METHODOLOGY

We then introduce country characteristics to analyze the borrower country exposures to global liquidity

 BorrowerCharacteristicsjt includes: (i) Exchange rate regime, (ii) Capital flows management tools; (iii) Bank regulation and supervision (iv) “Openness”, quality of institutions, foreign bank limits

  • Interaction to capture GL cyclicality

1 2 3 4 5

*

jt jt jt t jt t jt j jt

L DomesticFactor InterestSpread GlobalLiquidity BorrowerCharacteristics GlobalLiquidity BorrowerCharacteristics                  

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Table 4 - Regression Results for Cross-Border Claims, for period 1990Q1-2012Q4 Panel A - Dependent Variable: Log Changes in BIS Locational Cross-Border Claims on Banks (in %)

(1) (9) (10) (11) (12) (13) 1990-2000 2001-2012 2001-2006 0.227*** 0.160*** 0.175*** 0.170** 0.138* 0.0417 (0.0537) (0.0530) (0.0523) (0.0771) (0.0706) (0.0775)

  • 0.0981***
  • 0.0747***
  • 0.0859***
  • 0.0142
  • 0.0587
  • 0.108

(0.0227) (0.0237) (0.0212) (0.0350) (0.0552) (0.0736)

  • 0.0223

0.0259 0.0413 0.0369 0.00422 0.0433 (0.0308) (0.0334) (0.0349) (0.0443) (0.0449) (0.0637)

  • 0.149***
  • 0.175***

0.0311

  • 0.166***
  • 0.138***

(0.0289) (0.0272) (0.0516) (0.0323) (0.0427)

  • 0.222

0.296

  • 1.366

0.0178

  • 3.181

(0.529) (0.532) (0.885) (0.691) (3.851) 0.179***

  • 0.0437

0.105*

  • 0.133

(0.0496) (0.0876) (0.0619) (0.132) 0.115** (0.0463)

  • 0.220

0.0541

  • 0.515**
  • 1.061***

(0.151) (0.255) (0.209) (0.345) 0.100 (0.0946) 0.0767*** 0.0976***

  • 0.0612*

0.168*** 0.133** (0.0240) (0.0273) (0.0317) (0.0404) (0.0525) Country Fixed Effect Y Y Y Y Y Y Observations 5,448 5,448 5,448 2,079 3,369 1,670 R-squared 0.013 0.048 0.043 0.014 0.065 0.021 Number of countries 77 77 77 65 77 74 G4 Countries M2 (Annual growth rate) Growth of Real US Credit US Slope of Yield Curve Real Federal Fund Rate 1990-2012 TED Spread US Bank Leverage CBOE VIX GDP Growth (lag) Inflation (lag) Change in Interest Rate Differential (Domestic rate - Fed Fund Rate) Variables

Q1- REGRESSION RESULTS: LENDING TO BANKS

  • Proxies of demand

significant across specifications

  • VIX significant

with large impact

  • US dealer

leverage & domestic credit growth (+)

  • Slope of yield

curve (-)

  • Also increase with

M2 growth

  • Period 2001-12

driving the results

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SLIDE 14

Table 4 Cont. - Regression Results for Cross-Border Claims, for period 1990Q1-2012Q4 Dependent Variable: Log Changes in BIS Locational Cross-Border Claims on Non-Banks (in %)

(1) (9) (10) (11) (12) (13) 1990-2000 2001-2012 2001-2006 0.182*** 0.126*** 0.141*** 0.137*** 0.126***

  • 0.0454

(0.0298) (0.0250) (0.0267) (0.0296) (0.0387) (0.0536)

  • 0.0223
  • 0.00680
  • 0.0102

0.00804 0.0245

  • 0.0401

(0.0197) (0.0197) (0.0192) (0.0179) (0.0365) (0.0364)

  • 0.0143

0.0171 0.0330 0.0258

  • 0.00775
  • 0.00873

(0.0281) (0.0268) (0.0272) (0.0353) (0.0344) (0.0289)

  • 0.0897***
  • 0.113***
  • 0.0246
  • 0.115***
  • 0.151***

(0.0160) (0.0156) (0.0296) (0.0210) (0.0295)

  • 0.0969

0.403

  • 0.198

0.377

  • 3.269

(0.329) (0.328) (0.610) (0.413) (2.623) 0.150*** 0.0789 0.103** 0.0417 (0.0316) (0.0564) (0.0453) (0.0594) 0.141*** (0.0292)

  • 0.303***
  • 0.185
  • 0.402**
  • 0.919***

(0.0986) (0.128) (0.198) (0.334) 0.0660 (0.0630) 0.0211 0.0331*

  • 0.00169

0.0137 0.00497 (0.0153) (0.0172) (0.0259) (0.0295) (0.0388) Country Fixed Effect Y Y Y Y Y Y Observations 5,420 5,420 5,420 2,055 3,365 1,666 R-squared 0.015 0.056 0.050 0.019 0.070 0.041 Number of countries 77 77 77 65 77 74 1990-2012 Variables G4 Countries M2 (Annual growth rate) TED Spread US Bank Leverage Growth of Real US Credit US Slope of Yield Curve Real Federal Fund Rate GDP Growth (lag) Inflation (lag) Change in Interest Rate Differential (Domestic rate - Fed Fund Rate) CBOE VIX

Q1- REGRESSION RESULTS: LENDING TO REAL SECTOR

  • Similar to lending

to banks, but M2 and inflation not as important

  • Less sensitive to

GL than cross- border lending to banks

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SLIDE 15

VIX – Similar across G4

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SLIDE 16

TED SPREADS – Different across G4

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SLIDE 17

BANK LEVERAGE – Also different across G4

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SLIDE 18

Table 5 - Regression Results for Cross-Border Claims to Banks and Non-Banks, Individual G4 variables Panel A - Dependent Variable: Log Changes in BIS Locational Cross-Border Claims on Banks (in %, period 2001-12)

VIX TED Bank Leverage Real Credit Growth Real Policy Rate Slope of yield curve M2 growth (national currency) Coefficient

  • 0.251***
  • 0.433

0.364*** 0.284*** 0.446***

  • 1.309***
  • 0.879***

Standard error (0.0294) (0.668) (0.0652) (0.0791) (0.138) (0.242) (0.139) R2 0.051 0.010 0.035 0.019 0.014 0.024 0.032 Coefficient

  • 0.258***
  • 4.455***

0.930*** 0.127** 0.454***

  • 1.214***

0.110** Standard error (0.0337) (0.861) (0.159) (0.0481) (0.129) (0.294) (0.0458) R2 0.039 0.025 0.031 0.015 0.019 0.025 0.012 Coefficient

  • 0.243***
  • 3.213***

0.624** 0.393*** 0.0815

  • 1.338***

0.401*** Standard error (0.0291) (0.764) (0.285) (0.0864) (0.224) (0.303) (0.130) R2 0.046 0.019 0.013 0.025 0.010 0.025 0.017 Coefficient

  • 0.271***
  • 8.463***

0.0617 0.0548

  • 0.250

1.941**

  • 1.580***

Standard error (0.0315) (2.021) (0.123) (0.0916) (0.435) (0.878) (0.348) R2 0.045 0.017 0.010 0.010 0.010 0.012 0.018 S4 Economy UK EA JP US

Q2- US VS. OTHER G4 GL DRIVERS (TO BANKS)

  • Similar results across VIX
  • US TED not significant, but other G4 TED have explanatory power
  • M2 growth in US and Japan (-), but UK and EA (+)
  • Non-US G4 matter too, sometimes even more important
  • Results similar, but smaller effects for non-banks
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SLIDE 19

Asia West Hemisphere Asia West Hemisphere US TED spreads

  • 2.817**
  • 0.908
  • 1.031
  • 0.299

(0.973) (1.070) (0.641) (0.332) UK TED spreads

  • 5.640***
  • 5.006***
  • 3.845***
  • 2.142**

(1.618) (1.372) (1.061) (0.832) EA TED spreads

  • 5.091***
  • 1.698**
  • 3.384***
  • 0.692

(1.403) (0.779) (0.864) (0.804) US bank leverage 0.0827 0.251** 0.114 0.116*** (0.0878) (0.101) (0.0767) (0.0368) UK bank leverage 0.409* 0.667** 0.412* 0.489*** (0.207) (0.290) (0.191) (0.0984) EA bank leverage

  • 0.569
  • 0.803
  • 0.251
  • 0.0645

(0.391) (0.453) (0.312) (0.144) US real credit growth 0.0641

  • 0.0733

0.166* 0.0264 (0.0832) (0.0888) (0.0911) (0.0415) UK real credit growth

  • 0.0755
  • 0.0470
  • 0.0195

0.00488 (0.0677) (0.0646) (0.0481) (0.0250) EA real credit growth 0.0566 0.199 0.139 0.190*** (0.104) (0.126) (0.0955) (0.0434) US real policy rate

  • 0.00835

0.339 0.505* 0.284* (0.202) (0.257) (0.232) (0.141) UK real policy rate

  • 0.0204

0.00279 0.0589 0.0319 (0.163) (0.146) (0.145) (0.0886) EA real policy rate

  • 0.986**
  • 0.154
  • 0.218

0.0247 (0.384) (0.568) (0.301) (0.156) US slope of yield curve

  • 0.712*
  • 1.234**
  • 1.161***
  • 1.027**

(0.389) (0.426) (0.314) (0.361) UK slope of yield curve

  • 0.126
  • 0.493
  • 0.241
  • 0.407**

(0.385) (0.360) (0.286) (0.145) EA slope of yield curve

  • 0.0889
  • 0.739**
  • 0.273
  • 0.556***

(0.416) (0.330) (0.305) (0.122) Claims on Banks Claims on Non-banks G4 Variables

Q2 - US VS. OTHER G4 GL DRIVERS (OUTSIDE REGION)

  • Individual G4 GL

matters most for non-G4 borrower inside region (not shown),

  • but outside region

too (e.g. UK and EA Ted Spreads on Asian and WH borrowers)

  • Results holds for

claims on both banks and non- banks

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SLIDE 20

Table 7 - Interaction Effects of Country Characteritics with Global Liquidity Variables Panel A - Dependent Variable: Log Changes in BIS Locational Cross-Border Claims on Banks (in %) US VIX UK TED US Dealer Bank Leverage UK real policy rate UK slope of yield curve G4 Countries M2 (Annual growth rate) Exchange rate flexibility 1.305 1.634 1.382 4.180*** 1.969** 0.915 1.610 (0.954) (1.007) (0.841) (1.130) (0.765) (0.769) (0.998) Exchange rate flexibility * X

  • 0.0134
  • 0.541
  • 0.132***
  • 0.270***

0.802***

  • 0.0689***

(0.0113) (0.475) (0.0400) (0.0915) (0.176) (0.0164) Capital controls

  • 0.0110
  • 0.00284
  • 0.0270

0.0840

  • 0.00390
  • 0.0324

0.0274 (0.0249) (0.0307) (0.0320) (0.0563) (0.0316) (0.0251) (0.0294) Capital controls * X

  • 0.000415
  • 0.0158
  • 0.00518**
  • 0.0139***

0.0301***

  • 0.00346**

(0.000802) (0.0228) (0.00232) (0.00457) (0.00971) (0.00138) Capital stringency

  • 0.565**
  • 0.403
  • 0.392

1.233**

  • 0.427
  • 0.967***
  • 0.411

(0.269) (0.285) (0.288) (0.561) (0.296) (0.269) (0.366) Capital stringency * X

  • 0.00629
  • 0.263
  • 0.0809***
  • 0.0785

0.423***

  • 0.0442***

(0.00434) (0.178) (0.0254) (0.0590) (0.0946) (0.0123) Supervisory power

  • 0.136
  • 0.0620
  • 0.0212

0.420 0.0155

  • 0.316

0.0230 (0.306) (0.305) (0.322) (0.366) (0.312) (0.311) (0.336) Supervisory power * X

  • 0.00364*
  • 0.176*
  • 0.0250**
  • 0.0599**

0.258***

  • 0.0160***

(0.00215) (0.0896) (0.0110) (0.0281) (0.0511) (0.00424) Institution quality 1/

  • 3.549***
  • 3.130***
  • 3.545***
  • 1.064
  • 2.761***
  • 3.734***
  • 2.956***

(0.982) (1.026) (1.071) (1.231) (1.002) (0.967) (1.075) Institution quality * X

  • 0.0155
  • 0.645
  • 0.0735**
  • 0.237***

0.606***

  • 0.0484**

(0.0109) (0.390) (0.0367) (0.0778) (0.159) (0.0197) Limits on foreign banks

  • 0.0616

1.213 1.533 5.303** 0.207

  • 1.187**

0.0106 (0.671) (1.014) (1.047) (2.107) (0.602) (0.483) (1.230) Limits on foreign banks * X

  • 0.0561
  • 3.488**
  • 0.257***
  • 0.404**

1.091***

  • 0.0336

(0.0351) (1.440) (0.0858) (0.158) (0.385) (0.105) X Variables

Q3- BORROWER COUNTRY CHARACTERISTICS (BANKS)

  • Better institutions increase claims on banks and non- banks
  • But more flexible exch rates/stricter capital controls will cyclical impact
  • Stricter banking regulation only reduce cyclical impact on banks.
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CONCLUSIONS / POLICY RECOMMENDATIONS

 GL matter for cross-border bank flows

  • Not only US, also UK/Euro Area bank conditions

 Country-specific factors/policies matter:

  • Macro policy (FX rate), cap flow mgmt, bank regulation

& supervision vs. Better institutions and foreign banks

  • Not possible to fully insolate from inflows but

Controls 25 p’tile  75 p’tile  Bank Flows 19%  10%

 Policy insight for

  • Bi- and multilateral surveillance
  • Country policy to max gains from financial globalization

 Questions for future research

  • Other flows. Best indicators. Micro-evidence on
  • channels. Theory.
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SLIDE 22

22

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SLIDE 23

BACKGROUND SLIDES

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SLIDE 24

DATA – CORRELATIONS ACROSS US GL DRIVERS

Panel B - Correlation Matrix GDP Growth (lag) Inflation (lag) Change in Interest Rate Differenti CBOE VIX US TED Spread US Bank Leverage Growth of Real US Credit Real US Federal Fund Rate US Slope

  • f Yield

Curve S4 Countries M2 GDP Growth (lag) 1.00 Inflation (lag) 0.01 1.00 Change in Interest Rate Differential 0.02

  • 0.15

1.00 CBOE VIX

  • 0.08

0.04 0.16 1.00 US TED Spread 0.11 0.09 0.12 0.40 1.00 US Bank Leverage 0.17

  • 0.05

0.01

  • 0.23

0.21 1.00 Growth of Real US Credit 0.09

  • 0.06
  • 0.12
  • 0.17

0.13 0.68 1.00 Real US Federal Fund Rate 0.08 0.07

  • 0.05
  • 0.09

0.25 0.25 0.38 1.00 US Slope of Yield Curve

  • 0.17
  • 0.02

0.05 0.18

  • 0.30
  • 0.45
  • 0.52
  • 0.63

1.00 S4 Countries M2 0.00 0.01 0.05

  • 0.05

0.14 0.17

  • 0.04
  • 0.24

0.20 1.00

  • Correlations for US low in general
  • With exceptions: Leverage-Credit (0.68) and Level-Slope of Interest Rate

(-0.63)

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SLIDE 25

DATA – CORRELATIONS AMONG G4 GL DRIVERS

  • Highest for VIX, TED Spread
  • Less for policy rate, slope
  • Least for M2 (except UK-EU)
  • High for leverage and credit
  • Japan generally exception

US slope of yield curve 1.00 UK slope of yield curve 0.71 1.00 EU slope of yield curve 0.65 0.92 1.00 JP slople of yield curve

  • 0.06 -0.20 -0.17

1.00 US growth rate of M2 1.00 UK growth rate of M2

  • 0.26

1.00 EU growth rate of M2 0.17 0.63 1.00 JP growth rate of M2 0.19 -0.43 -0.56 1.00 US Dealer bank leverage 1.00 UK bank leverage 0.82 1.00 EU bank leverage 0.72 0.75 1.00 JP bank leverage 0.33 0.32 0.56 1.00 US growth rate of real credit 1.00 UK growth rate of real credit 0.79 1.00 EU growth rate of real credit 0.64 0.87 1.00 JP growth rate of real credit

  • 0.08 -0.18

0.12 1.00 US VIX 1.00 UK VIX 0.94 1.00 EU VIX 0.87 0.93 1.00 JP VIX 0.89 0.86 0.78 1.00 US TED spread 1.00 UK TED spread 0.84 1.00 EU TED spread 0.72 0.89 1.00 JP TED spread 0.83 0.87 0.75 1.00 US real policy rate 1.00 UK real policy rate 0.58 1.00 EU real policy rate 0.78 0.58 1.00 JP real policy rate 0.27 -0.16 0.22 1.00

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SLIDE 26

DATA – DOMESTIC BANK CREDIT

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SLIDE 27

DATA – SLOPE OF YIELD CURVE

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SLIDE 28

DATA – POLICY RATE

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SLIDE 29

DATA – MONETARY AGGREGATES

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SLIDE 30

Panel B - Dependent Variable: Log Changes in BIS Locational Cross-Border Claims on Non-Banks (in %, period 2001-12)

VIX TED Bank Leverage Real Credit Growth Real Policy Rate Slope of yield curve M2 growth (national currency) Coefficient

  • 0.163***

0.113 0.264*** 0.288*** 0.636***

  • 1.234***
  • 0.523***

Standard error (0.0184) (0.377) (0.0438) (0.0580) (0.108) (0.170) (0.0832) R2 0.052 0.013 0.043 0.033 0.031 0.041 0.031 Coefficient

  • 0.163***
  • 2.617***

0.734*** 0.119*** 0.382***

  • 0.935***

0.146*** Standard error (0.0203) (0.526) (0.109) (0.0330) (0.0889) (0.183) (0.0350) R2 0.039 0.025 0.043 0.024 0.029 0.034 0.023 Coefficient

  • 0.162***
  • 2.392***

0.623*** 0.337*** 0.381**

  • 1.049***

0.361*** Standard error (0.0174) (0.498) (0.200) (0.0569) (0.157) (0.197) (0.0859) R2 0.049 0.024 0.021 0.037 0.016 0.034 0.027 Coefficient

  • 0.157***
  • 3.677***

0.0957 0.253*** 0.114 2.172***

  • 1.358***

Standard error (0.0198) (1.199) (0.0878) (0.0580) (0.270) (0.791) (0.250) R2 0.040 0.017 0.014 0.021 0.014 0.018 0.027 US UK EA JP S4 Economy

Q2 - US VS. OTHER G4 GL DRIVERS (TO REAL SECTOR)

  • Non-G4 matter too, and sometimes even more important
  • Results similar, but slightly less large/strong for non-banks
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SLIDE 31

Q3 - BORROWER CHARACTERISTICS (NON-BANKS)

  • Better institutions increase claims on non- banks
  • But in general, more limited cyclical impact on non-banks across borrower

characteristics

Panel B - Dependent Variable: Log Changes in BIS Locational Cross-Border Claims on Non-Banks (in %) US VIX UK TED US Dealer Bank Leverage US real policy rate US slope of yield curve G4 Countries M2 (Annual growth rate) Exchange rate flexibility

  • 0.874
  • 0.710
  • 0.854

1.297

  • 0.966
  • 0.931*
  • 0.649

(0.534) (0.537) (0.857) (0.948) (0.784) (0.537) (0.671) Exchange rate flexibility * X

  • 0.00676
  • 0.0649
  • 0.0988***

0.195*** 0.0159

  • 0.0517***

(0.00623) (0.190) (0.0268) (0.0563) (0.0846) (0.0135) Capital controls

  • 0.0397
  • 0.0369
  • 0.0507*

0.0331

  • 0.0385
  • 0.0334
  • 0.0152

(0.0245) (0.0267) (0.0277) (0.0357) (0.0261) (0.0274) (0.0269) Capital controls * X

  • 0.000143

0.00216

  • 0.00395***

0.00177 0.00606

  • 0.00166*

(0.000496) (0.0144) (0.00131) (0.00356) (0.00510) (0.000892) Capital stringency

  • 0.356
  • 0.377
  • 0.416

1.020**

  • 0.318
  • 0.451
  • 0.324

(0.268) (0.283) (0.293) (0.490) (0.279) (0.303) (0.333) Capital stringency * X 0.000804 0.101

  • 0.0612***

0.107*** 0.0157

  • 0.0229**

(0.00294) (0.111) (0.0206) (0.0269) (0.0551) (0.00941) Supervisory power 0.0847 0.135 0.125 0.492** 0.115 0.110 0.162 (0.143) (0.145) (0.157) (0.243) (0.147) (0.151) (0.171) Supervisory power * X

  • 0.00250
  • 0.0146
  • 0.0185**

0.0502***

  • 0.0191
  • 0.00769*

(0.00156) (0.0578) (0.00888) (0.0124) (0.0231) (0.00411) Institution quality 1/

  • 3.007***
  • 2.901***
  • 3.233***
  • 1.330*
  • 2.955***
  • 3.141***
  • 2.981***

(0.506) (0.472) (0.536) (0.723) (0.499) (0.496) (0.549) Institution quality * X

  • 0.00392

0.151

  • 0.0491**

0.117**

  • 0.00397
  • 0.0182

(0.00621) (0.199) (0.0220) (0.0501) (0.0705) (0.0136) Limits on foreign banks

  • 0.724
  • 0.664*
  • 0.723

1.783

  • 0.802
  • 1.140***
  • 0.731

(0.561) (0.371) (0.462) (1.415) (0.551) (0.419) (0.845) Limits on foreign banks * X

  • 0.00263
  • 0.174
  • 0.114**
  • 0.150

0.205

  • 0.0264

(0.0197) (0.518) (0.0496) (0.0968) (0.175) (0.0445) X Variables