Differential Effects of Macroprudential Policy

Nina Biljanovska and Sophia Chen

No 2023/043, IMF Working Papers from International Monetary Fund

Abstract: We explore the differential effects of lender-based macroprudential policies on new mortgage borrowing for households of different income using a comprehensive dataset that links macroprudential policy actions with household survey data for European Union countries. The main results suggest that higher-income households on average experience a larger reduction in mortgage loan size than lower-income households when regulation targeting total lenders’ assets tightens. In contrast, lower-income households on average experience a larger reduction in mortgage loan size than higher-income households when regulation targeting lenders’ capital requirements tightens. We also provide evidence of the different channels through which the differential effects operate.

Keywords: Household borrowing; macroprudential policy; income distribution; differential effect; higher-income household; capital requirements; household income; capital requirement; Income; Mortgages; Loans; Macroprudential policy instruments; Global (search for similar items in EconPapers)
Pages: 45
Date: 2023-02-24
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-ure
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