Leakages From Macroprudential Regulations The Case Of Household Specific Tools And Corporate Credit

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Leakages from Macroprudential Regulations: The Case of Household-Specific Tools and Corporate Credit

International Monetary Fund
Leakages from Macroprudential Regulations The Case of Household Specific Tools and Corporate Credit Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 35 pages
File Size : 42,7 Mb
Release : 2021-04-29
Category : Business & Economics
ISBN : 9781513573731

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Leakages from Macroprudential Regulations: The Case of Household-Specific Tools and Corporate Credit by International Monetary Fund Pdf

Sector-specific macroprudential regulations increase the riskiness of credit to other sectors. Using firm-level data, this paper computed the measures of the riskiness of corporate credit allocation for 29 advanced and emerging economies. Consistently across these measures, the paper finds that during credit expansions, an unexpected tightening of household-specific macroprudential tools is followed by a rise in riskier corporate lending. Quantitatively, such unexpected tightening during a period of rapid credit growth increases the riskiness of corporate credit by around 10 percent of the historical standard deviation. This result supports early policy interventions when credit vulnerabilities are still low, since sectoral leakages will be less important at this stage. Further evidence from bank lending standards surveys suggests that the leakage effects are stronger for larger firms compared to SMEs, consistent with recent evidence on the use of personal real estate as loan collateral by small firms.

Staff Guidance Note on Macroprudential Policy

International Monetary Fund
Staff Guidance Note on Macroprudential Policy Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 45 pages
File Size : 55,5 Mb
Release : 2014-06-11
Category : Business & Economics
ISBN : 9781498342629

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Staff Guidance Note on Macroprudential Policy by International Monetary Fund Pdf

This note provides guidance to facilitate the staff’s advice on macroprudential policy in Fund surveillance. It elaborates on the principles set out in the “Key Aspects of Macroprudential Policy,” taking into account the work of international standard setters as well as the evolving country experience with macroprudential policy. The main note is accompanied by supplements offering Detailed Guidance on Instruments and Considerations for Low Income Countries

Key Aspects of Macroprudential Policy - Background Paper

International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Monetary and Capital Markets Department
Key Aspects of Macroprudential Policy Background Paper Book PDF

Author : International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 64 pages
File Size : 46,6 Mb
Release : 2013-10-06
Category : Business & Economics
ISBN : 9781498341714

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Key Aspects of Macroprudential Policy - Background Paper by International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Monetary and Capital Markets Department Pdf

The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.

Evaluating the Net Benefits of Macroprudential Policy

Mr.Nicolas Arregui,Mr.Jaromir Benes,Mr.Ivo Krznar,Ms.Srobona Mitra,Mr.Andre Santos
Evaluating the Net Benefits of Macroprudential Policy Book PDF

Author : Mr.Nicolas Arregui,Mr.Jaromir Benes,Mr.Ivo Krznar,Ms.Srobona Mitra,Mr.Andre Santos
Publisher : International Monetary Fund
Page : 73 pages
File Size : 50,8 Mb
Release : 2013-07-17
Category : Business & Economics
ISBN : 9781484335727

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Evaluating the Net Benefits of Macroprudential Policy by Mr.Nicolas Arregui,Mr.Jaromir Benes,Mr.Ivo Krznar,Ms.Srobona Mitra,Mr.Andre Santos Pdf

The paper proposes a simple, new, analytical framework for assessing the cost and benefits of macroprudential policies. It proposes a measure of net benefits in terms of parameters that can be estimated: the probability of crisis, the loss in output given crisis, policy effectiveness in bringing down both the probability and damage during crisis, and the output-cost of a policy decision. It discusses three types of policy leakages and identifies instruments that could best minimize the leakages. Some rules of thumb for policymakers are provided.

Macroprudential Policy and Bank Systemic Risk: Does Inflation Targeting Matter?

Mohamed Belkhir,Sami Ben Naceur,Bertrand Candelon,Woon Gyu Choi,Farah Mugrabi
Macroprudential Policy and Bank Systemic Risk Does Inflation Targeting Matter Book PDF

Author : Mohamed Belkhir,Sami Ben Naceur,Bertrand Candelon,Woon Gyu Choi,Farah Mugrabi
Publisher : International Monetary Fund
Page : 46 pages
File Size : 48,7 Mb
Release : 2023-06-02
Category : Business & Economics
ISBN : 9798400245008

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Macroprudential Policy and Bank Systemic Risk: Does Inflation Targeting Matter? by Mohamed Belkhir,Sami Ben Naceur,Bertrand Candelon,Woon Gyu Choi,Farah Mugrabi Pdf

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.

What Went Wrong with Capitalism

Ruchir Sharma
What Went Wrong with Capitalism Book PDF

Author : Ruchir Sharma
Publisher : Simon and Schuster
Page : 384 pages
File Size : 41,7 Mb
Release : 2024-06-11
Category : Business & Economics
ISBN : 9781668008287

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What Went Wrong with Capitalism by Ruchir Sharma Pdf

A century of expanding government has distorted financial markets, stoked massive inequality, and soaked America in debt. Capitalism didn’t fail, it was ruined... What went wrong with capitalism? Ruchir Sharma’s account is not like any you will have heard before. He says progressives are right, in part, when they mock modern capitalism as “socialism for the rich.” For a century, governments have expanded in just about every measurable dimension, from spending to regulation and the scale of financial rescues when the economy wobbles. The result is expensive state guarantees for everyone—bailouts for the rich, entitlements for the middle class, welfare for the poor. Taking you back to the 19th century, Sharma shows how completely the reflexes of government have changed: from hands-off to hands-on, from doing too little to help anyone in hard times to today trying to prevent anyone suffering any economic pain, ever. Trading sins of omission and indifference for excesses of spending and meddling, governments from the United States to Europe and Japan have pumped so much money into their economies that financial markets can no longer invest all that capital efficiently. Inadvertently, they have fueled the rise of monopolies, “zombie” firms, and billionaires. They have made capitalism less fair and less efficient, which is slowing economic growth and fueling popular anger. The first step to a cure is a correct diagnose of the problem. Capitalism has been badly distorted by constant government intervention and the relentless spread of a bailout culture. Building an even bigger state will only double down on what ruined capitalism in the first place.

The Riskiness of Credit Allocation and Financial Stability

Mr.Luis Brandao-Marques,Qianying Chen,Claudio Raddatz,Jérôme Vandenbussche,Peichu Xie
The Riskiness of Credit Allocation and Financial Stability Book PDF

Author : Mr.Luis Brandao-Marques,Qianying Chen,Claudio Raddatz,Jérôme Vandenbussche,Peichu Xie
Publisher : International Monetary Fund
Page : 39 pages
File Size : 47,8 Mb
Release : 2019-09-27
Category : Business & Economics
ISBN : 9781513513775

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The Riskiness of Credit Allocation and Financial Stability by Mr.Luis Brandao-Marques,Qianying Chen,Claudio Raddatz,Jérôme Vandenbussche,Peichu Xie Pdf

We explore empirically how the time-varying allocation of credit across firms with heterogeneous credit quality matters for financial stability outcomes. Using firm-level data for 55 countries over 1991-2016, we show that the riskiness of credit allocation, captured by Greenwood and Hanson (2013)’s ISS indicator, helps predict downside risks to GDP growth and systemic banking crises, two to three years ahead. Our analysis indicates that the riskiness of credit allocation is both a measure of corporate vulnerability and of investor sentiment. Economic forecasters wrongly predict a positive association between the riskiness of credit allocation and future growth, suggesting a flawed expectations process.

The Anatomy of the Transmission of Macroprudential Policies

Viral V. Acharya,Katharina Bergant,Matteo Crosignani,Tim Eisert,Fergal McCann
The Anatomy of the Transmission of Macroprudential Policies Book PDF

Author : Viral V. Acharya,Katharina Bergant,Matteo Crosignani,Tim Eisert,Fergal McCann
Publisher : International Monetary Fund
Page : 57 pages
File Size : 47,7 Mb
Release : 2020-05-22
Category : Business & Economics
ISBN : 9781513545158

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The Anatomy of the Transmission of Macroprudential Policies by Viral V. Acharya,Katharina Bergant,Matteo Crosignani,Tim Eisert,Fergal McCann Pdf

We analyze how regulatory constraints on household leverage—in the form of loan-to-income and loan-to-value limits—a?ect residential mortgage credit and house prices as well as other asset classes not directly targeted by the limits. Supervisory loan level data suggest that mortgage credit is reallocated from low-to high-income borrowers and from urban to rural counties. This reallocation weakens the feedback loop between credit and house prices and slows down house price growth in “hot” housing markets. Consistent with constrained lenders adjusting their portfolio choice, more-a?ected banks drive this reallocation and substitute their risk-taking into holdings of securities and corporate credit.

Hot Property

Rob Nijskens,Melanie Lohuis,Paul Hilbers,Willem Heeringa
Hot Property Book PDF

Author : Rob Nijskens,Melanie Lohuis,Paul Hilbers,Willem Heeringa
Publisher : Springer
Page : 220 pages
File Size : 47,8 Mb
Release : 2019-06-14
Category : Business & Economics
ISBN : 9783030116743

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Hot Property by Rob Nijskens,Melanie Lohuis,Paul Hilbers,Willem Heeringa Pdf

This open access book discusses booming housing markets in cities around the globe, and the resulting challenges for policymakers and central banks. Cities are booming everywhere, leading to a growing demand for urban housing. In many cities this demand is out-pacing supply, which causes house prices to soar and increases the pressure on rental markets. These developments are posing major challenges for policymakers, central banks and other authorities responsible for ensuring financial stability, and economic well-being in general.This volume collects views from high-level policymakers and researchers, providing essential insights into these challenges, their impact on society, the economy and financial stability, and possible policy responses. The respective chapters address issues such as the popularity of cities, the question of a credit-fueled housing bubble, the role of housing supply frictions and potential policy solutions. Given its scope, the book offers a revealing read and valuable guide for everyone involved in practical policymaking for housing markets, mortgage credit and financial stability.

Thailand

International Monetary Fund. Monetary and Capital Markets Department
Thailand Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 136 pages
File Size : 43,7 Mb
Release : 2019-10-07
Category : Business & Economics
ISBN : 9781513516486

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Thailand by International Monetary Fund. Monetary and Capital Markets Department Pdf

This Financial System Stability Assessment paper on Thailand highlights that assets of the insurance and mutual fund sectors have doubled as a share of gross domestic product over the last decade, and capital markets are largely on par with regional peers. The report discusses significant slowdown in China and advanced economies, a sharp rise in risk premia, and entrenched low inflation would adversely impact the financial system. Stress tests results suggest that the banking sector is resilient to severe shocks and that systemic and contagion risks stemming from interlinkages are limited. Financial system oversight is generally strong, but the operational independence of supervisory agencies can be strengthened further. The operational independence of supervisory agencies can be strengthened further by reducing the involvement of the Ministry of Finance in prudential issues and ensuring that each agency has full control over decisions that lie within its areas of responsibility.

Canada

International Monetary Fund. Monetary and Capital Markets Department
Canada Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 85 pages
File Size : 50,6 Mb
Release : 2019-06-24
Category : Business & Economics
ISBN : 9781498321112

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Canada by International Monetary Fund. Monetary and Capital Markets Department Pdf

This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.

Ireland

International Monetary Fund. Monetary and Capital Markets Department
Ireland Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 66 pages
File Size : 52,7 Mb
Release : 2022-07-07
Category : Business & Economics
ISBN : 9798400213564

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Ireland by International Monetary Fund. Monetary and Capital Markets Department Pdf

Ireland has considerably strengthened financial sector regulation and supervision since the 2016 FSAP, aided by the ECB/SSM, and is working with European and international regulators to strengthen oversight of the large market-based finance (MBF) sector. This strengthening is evidenced by a successful navigation through the challenges of Brexit and the pandemic. Despite global headwinds, Ireland is exiting the pandemic with strong economic growth and a highly capitalized and liquid banking system. The financial system has grown rapidly and in complexity, especially after Brexit, and Ireland has become a European base for large financial groups. The MBF sector has grown to the second largest in Europe, with global interlinkages.

Macroprudential Policy

International Monetary Fund
Macroprudential Policy Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 85 pages
File Size : 55,6 Mb
Release : 2011-10-01
Category : Business & Economics
ISBN : 9781463922603

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Macroprudential Policy by International Monetary Fund Pdf

This paper provides the most comprehensive empirical study of the effectiveness of macroprudential instruments to date. Using data from 49 countries, the paper evaluates the effectiveness of macroprudential instruments in reducing systemic risk over time and across institutions and markets. The analysis suggests that many of the most frequently used instruments are effective in reducing pro-cyclicality and the effectiveness is sensitive to the type of shock facing the financial sector. Based on these findings, the paper identifies conditions under which macroprudential policy is most likely to be effective, as well as conditions under which it may have little impact.

Preemptive Policies and Risk-Off Shocks in Emerging Markets

Ms. Mitali Das,Ms. Gita Gopinath,Şebnem Kalemli-Özcan
Preemptive Policies and Risk Off Shocks in Emerging Markets Book PDF

Author : Ms. Mitali Das,Ms. Gita Gopinath,Şebnem Kalemli-Özcan
Publisher : International Monetary Fund
Page : 54 pages
File Size : 46,6 Mb
Release : 2022-01-07
Category : Business & Economics
ISBN : 9781616358341

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Preemptive Policies and Risk-Off Shocks in Emerging Markets by Ms. Mitali Das,Ms. Gita Gopinath,Şebnem Kalemli-Özcan Pdf

We show that “preemptive” capital flow management measures (CFM) can reduce emerging markets and developing countries’ (EMDE) external finance premia during risk-off shocks, especially for vulnerable countries. Using a panel dataset of 56 EMDEs during 1996–2020 at monthly frequency, we document that countries with preemptive policies in place during the five year window before risk-off shocks experienced relatively lower external finance premia and exchange rate volatility during the shock compared to countries which did not have such preemptive policies in place. We use the episodes of Taper Tantrum and COVID-19 as risk-off shocks. Our identification relies on a difference-in-differences methodology with country fixed effects where preemptive policies are ex-ante by construction and cannot be put in place as a response to the shock ex-post. We control the effects of other policies, such as monetary policy, foreign exchange interventions (FXI), easing of inflow CFMs and tightening of outflow CFMs that are used in response to the risk-off shocks. By reducing the impact of risk-off shocks on countries’ funding costs and exchange rate volatility, preemptive policies enable countries’ continued access to international capital markets during troubled times.

LTV and DTI Limits—Going Granular

Luis I. Jacome H.,Ms. Srobona Mitra
LTV and DTI Limits Going Granular Book PDF

Author : Luis I. Jacome H.,Ms. Srobona Mitra
Publisher : International Monetary Fund
Page : 41 pages
File Size : 42,5 Mb
Release : 2015-07-15
Category : Business & Economics
ISBN : 9781513518930

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LTV and DTI Limits—Going Granular by Luis I. Jacome H.,Ms. Srobona Mitra Pdf

There is increasing interest in loan-to-value (LTV) and debt-service-to-income (DTI) limits as many countries face a new round of rising house prices. Yet, very little is known on how these regulatory instruments work in practice. This paper contributes to fill this gap by looking closely at their use and effectiveness in six economies—Brazil, Hong Kong SAR, Korea, Malaysia, Poland, and Romania. Insights include: rapid growth in high-LTV loans with long maturities or in the number of borrowers with multiple mortgages can be signs of build up in systemic risk; monitoring nonperforming loans by loan characteristics can help in calibrating changes in the LTV and DTI limits; as leakages are almost inevitable, countries strive to address them at an early stage; and, in most cases, LTVs and DTIs were effective in reducing loan-growth and improving debt-servicing performances of borrowers, but not always in curbing house price growth.