Macroprudential Policies in Peru: The effects of Dynamics Provisioning and Conditional Reserve Requirements

Miguel Cabello, José Lupú and Elías Minaya
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Miguel Cabello: Banco Central de Reserva del Perú
Elías Minaya: Banco Central de Reserva del Perú

No 2017-002, Working Papers from Banco Central de Reserva del Perú

Abstract: In the last decade, the banking credit has grown significantly in Peru, a partial dollarized economy. That imposed some challenges to the financial regulators to mitigate the risks derived from both excessive economic growth and currency mismatches of banks debtors. This document assesses the effectiveness of two macroprudential measures implemented by the financial regulators: dynamic provisioning and conditional reserve requirements. By using a credit register data, there is evidence that dynamic provisioning has a dampening impact on commercial credit growth. Moreover, mortgage dollarization has declined more rapidly after the implementation of the Conditional Reserve Requirement scheme, but there is no clear evidence about its impact on banks assets quality. In the case of dynamic provisioning, its effect over non-performing loans is asymmetric.

Date: 2017-02
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mac
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