Effective Macroprudential Policy: Cross-Sector Substitution from Price and Quantity Measures
IMF Working Papers, April 21, 2016
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Bibliographic details
- Authors: Janko Cizel, Jon Frost, Aerdt G. F. J. Houben, Peter Wierts
- Published: April 21, 2016
- Series: IMF Working Papers
Summary and key findings
- Macroprudential policy is increasingly being implemented worldwide.
- Empirical analysis confirms the expected effects of macroprudential policies on bank credit in both advanced economies and emerging market economies.
- There is evidence of substitution effects towards nonbank credit, especially in advanced economies, which reduces the policies’ effect on total credit.
- Quantity restrictions are particularly potent in constraining bank credit but also cause the strongest substitution effects.
Empirical results and scope
- Effects on bank credit:
- Confirmed for both advanced economies and emerging market economies.
- Substitution effects:
- Evident towards nonbank credit, especially in advanced economies.
- These substitution effects reduce the impact of macroprudential measures on total credit.
- Instrument differences:
- Quantity restrictions (quantity measures) are particularly effective at constraining bank credit.
- Quantity restrictions also produce the largest cross-sector substitution effects (towards nonbank credit).
Policy implications and recommendations
- There is a need to extend macroprudential policy beyond banking, especially in advanced economies, to address substitution towards nonbank credit and preserve policy effectiveness.
Publication and metadata
- Title: Effective Macroprudential Policy: Cross-Sector Substitution from Price and Quantity Measures
- Authors: Janko Cizel, Jon Frost, Aerdt G. F. J. Houben, Peter Wierts
- Date: April 21, 2016
- Series: IMF Working Papers
- Series identifier: Working Paper No. 2016/094
- Issue: 094
- Volume: 2016
- Pages: 47
- ISBN: 9781484337738
- ISSN: 1018-5941
- DOI: ---
- Subject tags: Bank credit, Banking, Credit, Financial institutions, Financial sector policy and analysis, Macroprudential policy, Macroprudential policy instruments, Money, Mutual funds
- Keywords: Bank credit, Credit, credit flow, credit growth, Financial cycle, financial supervision, Global, investment funds, Macroprudential policy, Macroprudential policy instruments, macroprudential regulation, Mutual funds, nonbank credit, nonbank credit Flow, nonbank intermediation, shadow banking, WP
International Monetary Fund — Effective Macroprudential Policy: Cross-Sector Substitution from Price and Quantity Measures (Working Paper No. 2016/094)