Becker, C., Ossandon Busch, M. and Tonzer, L. (2021). Macroprudential policy and intra-group dynamics: The effects of reserve requirements in Brazil Journal of Corporate Finance, 71:1--23.
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Affiliated author
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Publication year2021
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JournalJournal of Corporate Finance
We examine whether liquidity dynamics within banking groups matter for the transmission of macroprudential policy. Using matched bank headquarters-branch data for identification, we find a lending channel of reserve requirements for municipal branches whose headquarters are more exposed to the policy tool. The result is driven by the 2008–2009 crisis and is stronger for state-owned branches, especially when being less profitable and liquidity constrained. These findings suggest the presence of cross-regional distributional effects of macroprudential policies operating via internal capital markets.