Macro-prudential policies to mitigate financial system vulnerabilities
Stijn Claessens (),
Swati R. Ghosh and
Roxana Mihet ()
Journal of International Money and Finance, 2013, vol. 39, issue C, 153-185
Macro-prudential policies aimed at mitigating systemic financial risks have become part of the policy toolkit in many emerging markets and some advanced countries. Their effectiveness and efficacy are not well-known, however. Using panel data regressions, we analyze how changes in balance sheets of some 2800 banks in 48 countries over 2000–2010 respond to specific policies. Controlling for endogeneity, we find that measures aimed at borrowers – caps on debt-to-income and loan-to-value ratios, and limits on credit growth and foreign currency lending – are effective in reducing leverage, asset and noncore to core liabilities growth during boom times. While countercyclical buffers (such as reserve requirements, limits on profit distribution, and dynamic provisioning) also help mitigate increases in bank leverage and assets, few policies help stop declines in adverse times, consistent with the ex-ante nature of macro-prudential tools.
Keywords: Systemic risk; Macro-prudential policies; Effectiveness; Banking vulnerabilities (search for similar items in EconPapers)
JEL-codes: E43 E58 G18 G28 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (149) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Macro-Prudential Policies to Mitigate Financial System Vulnerabilities (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:39:y:2013:i:c:p:153-185
Access Statistics for this article
Journal of International Money and Finance is currently edited by J. R. Lothian
More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().