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Dr Matias Ossandon Busch

Dr Matias Ossandon Busch
Current Position

since 10/20

Research Affiliate

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 9/20

Senior Economist

CEMLA

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Research Interests
  • empirical banking
  • financial and real sector interactions
  • international banking in emerging countries
  • International Banking Library

Matias Ossandon Busch joined the institute as a Research Affiliate in October 2020. His research focuses on international banking, financial contagion through international banks, and the evaluation of policy interventions in the banking sector, with a special focus on developing countries.

Matias Ossandon Busch holds the position of Senior Economist at Center for Latin American Monetary Studies (CEMLA). Prior to that, he was working at IWH.

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Publications

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Global Banks and Synthetic Funding: The Benefits of Foreign Relatives

Fernando Eguren-Martin Matias Ossandon Busch Dennis Reinhardt

in: Journal of Money, Credit and Banking, No. 1, 2024

Abstract

Abstract This paper examines the effect of dislocations in foreign currency (FX) swap markets ("CIP deviations") on bank lending. Using data from UK banks we show that when the cost of obtaining swap-based funds in a particular foreign currency increases, banks reduce the supply of cross-border credit in that currency. This effect is increasing in the degree of banks' reliance on swap-based FX funding. Access to foreign relatives matters as banks employ internal capital markets to shield their cross-border FX lending supply from the described channel. Partial substitution occurs from banks outside the UK not affected by changes in synthetic funding costs.

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Macroprudential Policy and Intra-Group Dynamics: The Effects of Reserve Requirements in Brazil

Chris Becker Matias Ossandon Busch Lena Tonzer

in: Journal of Corporate Finance, December 2021

Abstract

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.

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Banking Globalization, Local Lending, and Labor Market Effects: Micro-level Evidence from Brazil

Felix Noth Matias Ossandon Busch

in: Journal of Financial Stability, October 2021

Abstract

Recent financial crises have prompted the interest in understanding how banking globalization interacts with domestic institutions in shaping foreign shocks’ transmission. This paper uses regional banking data from Brazil to show that a foreign funding shock to banks negatively affects lending by their regional branches. This effect increases in the presence of frictions in internal capital markets, which affect branches’ capacity to access funding from other regions via intra-bank linkages. These results also matter on an aggregate level, as municipality-level credit and job flows drop in exposed regions. Policies aiming to reduce the fragmented structure of regional banking markets could moderate the propagation of foreign shocks.

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Working Papers

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Stress-ridden Finance and Growth Losses: Does Financial Development Break the Link?

Serafín Martínez-Jaramillo Ricardo Montañez-Enríquez Matias Ossandon Busch Manuel Ramos-Francia Anahí Rodríguez-Martínez José Manuel Sánchez-Martínez

in: IWH Discussion Papers, No. 3, 2022

Abstract

Does financial development shield countries from the pass-through of financial shocks to real outcomes? We evaluate this question by characterising the probability density of expected GDP growth conditional on financial stability indicators in a panel of 28 countries. Our robust results unveil a non-linear nexus between financial stability and expected GDP growth, depending on countries’ degree of financial development. While both domestic and global financial factors affect expected growth, the effect of global factors is moderated by financial development. This result highlights a previously unexplored channel trough which financial development can break the link between financial (in)stability and GDP growth.

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Banks Fearing the Drought? Liquidity Hoarding as a Response to Idiosyncratic Interbank Funding Dry-ups

Helge Littke Matias Ossandon Busch

in: IWH Discussion Papers, No. 12, 2018

Abstract

Since the global financial crisis, economic literature has highlighted banks’ inclination to bolster up their liquid asset positions once the aggregate interbank funding market experiences a dry-up. To this regard, we show that liquidity hoarding and its detrimental effects on credit can also be triggered by idiosyncratic, i.e. bankspecific, interbank funding shocks with implications for monetary policy. Combining a unique data set of the Brazilian banking sector with a novel identification strategy enables us to overcome previous limitations for studying this phenomenon as a bankspecific event. This strategy further helps us to analyse how disruptions in the bank headquarters’ interbank market can lead to liquidity and lending adjustments at the regional bank branch level. From the perspective of the policy maker, understanding this market-to-market spillover effect is important as local bank branch markets are characterised by market concentration and relationship lending.

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