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The effect of warnings published in a financial stability report on loan-to-value ratios

Andrés Alegría, Rodrigo Alfaro and Felipe Córdova

Latin American Journal of Central Banking (previously Monetaria), 2021, vol. 2, issue 4

Abstract: This paper shows how central bank communications can play a role in macroprudential supervision. We document how specific warnings about real estate markets, published in the Central Bank of Chile's Financial Stability Reports of 2012, affected bank lending policies. We provide empirical evidence of a rebalancing in the characteristics of mortgage loans granted, which led to a reduction in the number of mortgage loans with high loan-to-value ratio.

Keywords: Macroprudential policy; LTV ratios; Central bank communication (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:lajcba:v:2:y:2021:i:4:s2666143821000211

DOI: 10.1016/j.latcb.2021.100041

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

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