Macroprudential policies from a microprudential angle: A note

Tito Cordella and Samuel Pienknagura

Latin American Journal of Central Banking (previously Monetaria), 2020, vol. 1, issue 1

Abstract: The standard macroprudential models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks’ risk choices and shows that different prudential instruments affect banks’ risk-taking incentives differently. Thus, conflicts may arise between the micro- and macroprudential stance.

Keywords: Macroprudential regulation; Microprudential regulation; Bank risk-taking (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:lajcba:v:1:y:2020:i:1:s2666143820300053

DOI: 10.1016/j.latcb.2020.100005

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Latin American Journal of Central Banking (previously Monetaria) is currently edited by Manuel Ramos-Francia

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