Distributional consequences of borrower-based macroprudential tools

Jose-Luis Peydró, Francesc Rodriguez-Tous, Jagdish Tripathy and Arzu Uluc

Chapter 10 in Research Handbook of Macroprudential Policy, 2026, pp 220-240 from Edward Elgar Publishing

Abstract: This paper provides an overview of the evidence from a range of country-specific studies on the effectiveness of borrower-based macroprudential tools which limit household leverage at a borrower level. Most studies find these measures effective in breaking the self-enforcing loop between household leverage and house prices. These measures have beneficial effects in terms of lower defaults and less volatile house-price dynamics during periods of economic distress. Their effects are heterogeneous across borrower types, with stronger impacts where leverage requirements are higher, such as among first-time buyers. Studies point to restrictions on household leverage having down-stream effects on job search, location choice, home-ownership and exposure to income shocks. Looking ahead, further research is required to conduct a comprehensive cost-benefit analysis of these measures, to adapt them to increased use of technology in financial intermediation and to examine their broader societal effects, including political outcomes and mental health.

Keywords: Macroprudential policy; Borrower-based tools; Distributional consequences; Financial stability; Wealth inequality (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035306206
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