Macroprudential Policy and Bank Systemic Risk: Does Inflation Targeting Matter?
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
This paper investigates macroprudential policy effects on bank systemic risk and the role of inflation targeting in such effects. Using bank-level data for 45 countries comprising various monetary and exchange rate regimes, our regime-dependent dynamic panel regression results point to complementarities between monetary and macroprudential policies. We find that the tightening of most macroprudential tools—including DSTI and LTV limits, and capital requirements—reduces bank systemic risk further under inflation targeting. Our findings lend credence to the view that inflation targeting strengthens macroprudential policy roles in mitigating financial stability risks.
Series:
Working Paper No. 2023/119
Subject:
Countercyclical capital buffers Financial regulation and supervision Financial sector policy and analysis Financial sector stability Macroprudential policy Macroprudential policy instruments Systemic risk
Frequency:
regular
English
Publication Date:
June 2, 2023
ISBN/ISSN:
9798400245008/1018-5941
Stock No:
WPIEA2023119
Format:
Paper
Pages:
46
Please address any questions about this title to publications@imf.org