Testing the characteristics of macroprudential policies’ differential impact on foreign and domestic banks’ lending in Croatia

Mario Bambulovic () and Miljana Valdec ()
Additional contact information
Mario Bambulovic: Croatian Financial Services Supervisory Agency, Zagreb, Croatia
Miljana Valdec: European Central Bank, Frankfurt am Main, Germany

Public Sector Economics, 2020, vol. 44, issue 2, 221-249

Abstract: In the aftermath of the 2008 financial crisis, macroprudential measures were labelled as policymakers’ best response to systemic risk and macro-financial imbalances, with their effectiveness still largely unknown due to limited use of such measures. The purpose of this paper is to clarify the potentials and limitations of these measures by evaluating both the immediate and the overall impact of macroprudential policies on banks’ lending to the non-financial private sector in Croatia. The findings reveal the divergent impact of macroprudential measures on banks’ lending with regards to their direction, i.e. tightening or loosening. Policy makers should bear this in mind when opting for a tightening of their policy stance as the reversal of that action may not match the initial impact of its introduction. Additionally, from a policymaker perspective, this paper provides potential evidence of cross-border policy spillovers, which should be taken into account in order to conduct an effective macroprudential policy.

Keywords: bank lending; cross-border policy spillovers; effectiveness; impact study analysis; limitations; macroprudential measures; potential; systemic risk (search for similar items in EconPapers)
JEL-codes: C23 E44 F42 G14 G21 G28 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.pse-journal.hr/upload/files/pse/2020/2/4.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ipf:psejou:v:44:y:2020:i:2:p:221-249

DOI: 10.3326/pse.44.2.4

Access Statistics for this article

More articles in Public Sector Economics from Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Martina Fabris ().