Credit Growth and the Effectiveness of Reserve Requirements and Other Macroprudential Instruments in Latin America

Author/Editor:

International Monetary Fund

Publication Date:

June 1, 2012

Electronic Access:

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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

Summary:

Over the past decade policy makers in Latin America have adopted a number of macroprudential instruments to manage the procyclicality of bank credit dynamics to the private sector and contain systemic risk. Reserve requirements, in particular, have been actively employed. Despite their widespread use, little is known about their effectiveness and how they interact with monetary policy. In this paper, we examine the role of reserve requirements and other macroprudential instruments and report new cross-country evidence on how they influence real private bank credit growth. Our results show that these instruments have a moderate and transitory effect and play a complementary role to monetary policy.

Series:

Working Paper No. 12/142

Subject:

Banking systems Central bank policy Central banks and their policies Credit Credit expansion Latin America Macroprudential Policy Monetary transmission mechanism Reserve requirements

English

Publication Date:

June 1, 2012

ISBN/ISSN:

9781475503999/1018-5941

Stock No:

WPIEA2012142

Format:

Paper

Pages:

29

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