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Author/Editor:
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Thierry Tressel ; Yuanyan Sophia Zhang
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Publication Date:
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January 12, 2016
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Electronic Access:
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Free Full text
(PDF file size is 1,620KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
The crisis has highlighted the importance of setting up macro-prudential oversight
frameworks, having effective macro-prudential instruments in place to be called upon to
mitigate growing financial imbalances as needed. We develop a new approach using the euro
area Bank Lending Survey to assess the effectiveness of macro-prudential policies in
containing credit growth and house price appreciation in mortgage markets. We find
instruments targeting the cost of bank capital most effective in slowing down mortgage credit
growth, and that the impact is transmitted mainly through price margins, the same banking
channel as monetary policy. Limits on loan-to-value ratios are also effective, especially when
monetary policy is excessively loose.
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Order a print copy
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Series:
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Working Paper No. 16/4
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Subject(s):
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Macroprudential policies and financial stability | Euro Area | Bank capital | Cost of capital | Loans | Monetary policy
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English
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Publication Date:
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January 12, 2016
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ISBN/ISSN:
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9781513547404/1018-5941
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Format:
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Paper
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Stock No:
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WPIEA2016004
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Pages:
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32
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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