Macroeconomic shocks, bank stability and the housing market in Venezuela

Oscar Carvallo () and Carolina Pagliacci

Emerging Markets Review, 2016, vol. 26, issue C, 174-196

Abstract: The interplay between leverage, house prices and financial instability may depend on the nature of shocks affecting an economy and its policy setting. We investigate which conditions or shocks explain financial stability and house prices in Venezuela. Rising financial instability is observationally associated with tight monetary conditions, high interest rates and an appreciated domestic currency. Under the current institutional framework, fiscal and foreign exchange policy actions deliver the strongest monetary effects affecting bank funding and stability. Real house prices respond to loose monetary conditions and real demand shocks. Findings suggest that macroprudential prescriptions should aim at stabilizing bank funding.

Keywords: Bank stability; House price; Macroeconomic shock; Policy shock; Credit; Macroprudential policy (search for similar items in EconPapers)
JEL-codes: E32 E44 R31 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:26:y:2016:i:c:p:174-196

DOI: 10.1016/j.ememar.2015.12.002

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