Effectiveness of Macroprudential Policies in Developing Asia: An Empirical Analysis

25 Pages Posted: 23 Dec 2015

See all articles by Minsoo Lee

Minsoo Lee

Asian Development Bank

Ruben Carlo O. Asuncion

Asian Development Bank - Economic Research

Jungsuk Kim

Sogang University - Institute of International and Area Studies

Date Written: July 2015

Abstract

The global financial crisis highlighted the need for national bank supervisory authorities to improve surveillance systems and to detect early on the buildup of macroeconomic risks that could threaten the entire financial system. This paper presents an empirical framework for analyzing how effective macroprudential policies control credit growth, leverage growth, and housing price appreciation. Two significant findings emerge. Broadly, macroprudential policies can indeed promote financial stability in Asia. More specifically, different types of macroprudential policies are more effective against different types of macroeconomic risks.

Keywords: developing Asia, financial stability, macroprudential policy

JEL Classification: G01, G28, L51

Suggested Citation

Lee, Minsoo and Asuncion, Ruben Carlo O. and Kim, Jungsuk, Effectiveness of Macroprudential Policies in Developing Asia: An Empirical Analysis (July 2015). Asian Development Bank Economics Working Paper Series No. 439. Available at SSRN: https://ssrn.com/abstract=2707498 or http://dx.doi.org/10.2139/ssrn.2707498

Minsoo Lee (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue
Mandaluyong City
Metro Manila, 1550
Philippines
63-2-683-1622 (Phone)
63-2-636-2342 (Fax)

HOME PAGE: http://www.adb.org

Ruben Carlo O. Asuncion

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Jungsuk Kim

Sogang University - Institute of International and Area Studies ( email )

35 Baekbeom-ro
Mapo-gu
Seoul, Seoul 121-742
Korea, Republic of (South Korea)

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