The Interaction Between Domestic Monetary Policy and Macroprudential Policy in Israel

Jonathan Benchimol, Inon Gamrasni, Michael Kahn, Sigal Ribon, Yossi Saadon, Noam Ben-Ze'ev, Asaf Segal and Yitzchak Shizgal

Papers from arXiv.org

Abstract: The global financial crisis (GFC) triggered the use of macroprudential policies imposed on the banking sector. Using bank-level panel data for Israel for the period 2004-2019, we find that domestic macroprudential measures changed the composition of bank credit growth but did not affect the total credit growth rate. Specifically, we show that macroprudential measures targeted at the housing sector moderated housing credit growth but tended to increase business credit growth. We also find that accommodative monetary policy surprises tended to increase bank credit growth before the GFC. We show that accommodative monetary policy surprises increased consumer credit when interacting with macroprudential policies targeting the housing market. Accommodative monetary policy interacted with nonhousing macroprudential measures to increase total credit.

Date: 2025-08
New Economics Papers: this item is included in nep-cba and nep-mon
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Published in Economic Modelling, 112, 2022, 105872

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Related works:
Journal Article: The interaction between domestic monetary policy and macroprudential policy in Israel (2022)
Journal Article: The interaction between domestic monetary policy and macroprudential policy in Israel (2022)
Working Paper: The interaction between domestic monetary policy and macroprudential policy in Israel (2022)
Working Paper: The Interaction Between Domestic Monetary Policy and Macroprudential Policy in Israel (2021)
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