Macroprudential FX Regulations and Small Firms: Unintended Consequences for Credit Growth

María Alejandra Amado
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María Alejandra Amado: BANCO DE ESPAÑA

No 2604, Working Papers from Banco de España

Abstract: Macroprudential FX regulations aim to reduce systemic currency-mismatch risks, yet their distributional effects on firms’ access to credit remain poorly understood. This paper studies Peru’s 2014 dedollarization policy, which sharply increased reserve requirements on banks’ foreign-currency liabilities in proportion to their dollar lending to nontradable firms. Exploiting cross-sectional variation in banks’ exposure and using administrative loan-level data covering the universe of firms, I find that moving from the median to the 75th percentile of exposure reduces growth in total new loans by roughly 10 percentage points for micro and small firms, with no significant effects for medium or large firms. Larger firms absorb the shock by reallocating borrowing across banks and into local currency credit, whereas micro firms experience sharp declines in both dollar and total credit, higher borrowing costs, and modest employment losses. The results highlight a trade-off between macroprudential objectives and credit access for small firms.

Keywords: macroprudential FX regulations; currency mismatch; small firms; emerging markets; borrowing constraints; bank lending channel (search for similar items in EconPapers)
JEL-codes: E43 E58 F31 F38 F41 (search for similar items in EconPapers)
Pages: 86 pages
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2604

DOI: 10.53479/42365

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