The Effectiveness of Borrower-Based Macroprudential Policies: A Cross-Country Analysis Using an Integrated Micro-Macro Simulation Model

Household Debt and Borrower-Based Measures in Finland: Insights from a Heterogeneous Agent Model

“…The second strand of literature consists of empirical work investigating the usefulness of various macroprudential policy toolkits. It includes papers by Acharya et al (2022), Albacete, Fessler, and Lindner (2018), Alam et al (2019), Brandao-Marques et al (2020, Giannoulakis et al (2023), Nier et al (2019) and Vandenbussche, Vogel, and Detragiache (2015). Among these studies, Alam et al (2019) assess the effectiveness of various policy tools, including LTV and DSTI, using a comprehensive data set of macroprudential policies.…”

Luxembourg

“…As suggested by the households' stress test, vulnerabilities are not restricted to lower income households, it is important to make sure that to avoid further build-up vulnerabilities on new flows through income-based measures. Jurča et al (2020) and Giannoulakis et al (2023) find a nonlinear complementarity between DSTI and LTV limits in reducing the probability of default, thereby lowering credit losses and preserving solvency ratios. The maximum loan-tovalue limit of 100 percent is very high and should also be reduced gradually over time.…”