Countercyclical Liquidity Policy and Credit Cycles: Evidence from Macroprudential and Monetary Policy in Brazil

Peydró, José-Luis, Rodrigo Gonzalez, João Barroso and Bernardus Van Doornik
Authors registered in the RePEc Author Service: Jose-Luis Peydro

No 15274, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that countercyclical liquidity policy smooths credit supply cycles, with stronger crisis effects. For identification, we exploit the Brazilian supervisory credit register and liquidity policy changes on reserve requirements, that affected banks differentially and have a monetary and prudential purpose. Liquidity policy strongly attenuates both the credit crunch in bad times and high credit supply in booms. Strong economic effects are twice as large during the crisis easing than during the boom tightening. Finally, in crises, liquidity easing: increase less credit supply by more financially constrained banks; and collateral requirements increase substantially, especially by banks providing higher credit supply.

Keywords: Liquidity; Reserve requirements; Credit cycles; Macroprudential and monetary policy (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-ban, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://cepr.org/publications/DP15274 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Countercyclical Liquidity Policy and Credit Cycles: evidence from macroprudential and monetary policy in Brazil (2020)
Working Paper: Countercyclical liquidity policy and credit cycles: Evidence from macroprudential and monetary policy in Brazil (2020)
Working Paper: Countercyclical liquidity policy and credit cycles: Evidence from macroprudential and monetary policy in Brazil (2020)
Working Paper: Countercyclical Liquidity Policy and Credit Cycles: Evidence from Macroprudential and Monetary Policy in Brazil (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:15274

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP15274

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().