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The Impact of Warnings Published in a Financial Stability Report on the Loan to Value Ratio

Andrés Alegría,, Rodrigo Alfaro () and Felipe Córdova

Working Papers Central Bank of Chile from Central Bank of Chile

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, with a reduction in the number of mortgage loans with high loan-to-value ratios (LTV), along with an increase in loans with lower LTV ratios.

New Economics Papers: this item is included in nep-ban, nep-cba, nep-dcm and nep-ure
Date: 2017-02
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