The Impact of LTV policy on Bank Lending: Evidence from Disaggregate Housing Loan Data

Chantawit Tantasith, Nasha Ananchotikul, Chatlada Chotanakarn, Vorada Limjaroenrat and Runchana Pongsaparn

No 90, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: How did the Loan-to-Value (LTV) measures aimed at increasing resilience of the banking system affect banks' lending? This paper utilizes bank-level and contract-level data of housing credit in Thailand spanning from 2004 to 2017, and applies the panel data and probit approaches in evaluating the impact of LTV measures introduced in 2009, 2011 and 2013 on the housing loans. We find that the LTV measures had an impact on banks' risk-taking behavior in ways consistent with the policy's objectives. The effects manifest in a reshaping of LTV distribution of the targeted loan sector rather than a credit growth slowdown at the bank level. In addition, the size of adjustment varies across different types of banks, with stronger response from large and small banks compared with medium banks. Overall, our results suggest that certain macroprudential policies can achieve target-specific outcome, but with differential impact across banks. Nevertheless, questions remain regarding the channels through which LTV measures impact bank lending and factors underlying diverging response among banks.

Keywords: Macroprudential Policy; Bank Lending; Thailand (search for similar items in EconPapers)
JEL-codes: C55 E58 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2018-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://www.pier.or.th/files/dp/pier_dp_090.pdf (application/pdf)

Related works:
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:pui:dpaper:90

Ordering information: This working paper can be ordered from
https://www.pier.or.th/en/dp/090/

Access Statistics for this paper

More papers in PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ().