International Lending of Dutch Insurers and Pension Funds: the Impact of ECB Monetary Policy and Prudential Policies in the Host Country

We analyze the relationship between ECB monetary policy and prudential policies in the host country and international lending by Dutch insurers and pension funds, using confidential institution-specific data. Our results suggest that insurers and pension funds do not significantly change their foreign lending in response to ECB policy changes, proxied by a shadow rate capturing both conventional and unconventional monetary policies. However, our findings suggest that these financial institutions do increase foreign lending when banks in the host country are more constrained by prudential regulation, pointing to a substitution effect from banks to non-banks.