Differential effects of macroprudential policy

Nina Biljanovska and Sophia Chen

Journal of Banking & Finance, 2025, vol. 176, issue C

Abstract: We construct a comprehensive dataset linking macroprudential policy instruments to household survey data from European Union countries. We show that two commonly used lender-based macroprudential policy instruments — levy on financial institutions and minimum capital requirement — affect new mortgage loans depending on the household’s income levels. Following higher levies on financial institutions, higher-income households on average experience a larger reduction in mortgage loan size compared to lower-income households. In contrast, following higher minimum capital requirements, lower-income households on average experience a larger reduction in loan size. We provide evidence of the different channels through which these differential effects operate.

Keywords: Household borrowing; Macroprudential policy; Income distribution (search for similar items in EconPapers)
JEL-codes: E60 G5 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:176:y:2025:i:c:s0378426625000767

DOI: 10.1016/j.jbankfin.2025.107456

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