Household Credit, Global Financial Cycle, and Macroprudential Policies: Credit Register Evidence from an Emerging Country

Abstract

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.

Financial Spillovers and Macroprudential Policies

“…Economies like Korea and Israel could also implement active and preemptive macroprudential policies if they are "prudentially" afraid of the tail risk of rapid worsening of their domestic financial market conditions. 34 See Ayyagari et al (2018), Cerutti et al (2017a,b), Epure et al (2018), andFendoglu (2017).…”

“…6 While the papers mentioned in the text conduct cross-country analyses, recently, there are many papers that use detailed, microeconomic data to examine the effectiveness of specific macroprudential policies in a particular country. This type of studies includes Acharya et al (2018), Auer and Ongena (2016), Barroso et al (2017), Camors et al (2019), Epure et al (2018), and Jimenez et al (2017). 7 A possible interpretation of financial instability deals with the presence of multiple equilibria associated with financial fragility.…”

Inefficient Regulation: Mortgages versus Total Credit

“…In the Irish context, Acharya et al (2022) examine how banks shift to riskier assets, such as riskier mortgages or corporate credit, in response to LTV limits on mortgages. Epure et al (2017) use Romanian mortgage data over a full credit cycle and show that tighter macro-prudential conditions are associated with a significant decline in credit. We complement these papers by estimating the effect of a mortgage cap on the supply of unregulated debt available only for home financing.…”