Financial Development and the Effectiveness of Macroprudential Measures

14 Pages Posted: 5 Oct 2016

See all articles by Yusuf Soner Baskaya

Yusuf Soner Baskaya

Government of the Republic of Turkey - Central Bank of the Republic of Turkey

Turalay Kenc

University of London - Imperial College

Ilhyock Shim

Bank for International Settlements (BIS)

Philip Turner

Bank for International Settlements (BIS) - Monetary and Economic Department

Date Written: September 2016

Abstract

We analyse how the effectiveness of price-based and quantity-based macroprudential measures vary by the level of financial development, using panel data for 37 advanced and emerging market economies over 1996–2011. First, we find that quantity-based measures effectively smooth the variations in total credit growth but price-based measures do not. We then show that at almost all levels of financial development, quantity-based measures significantly moderate credit growth, while price-based measures are effective only when the level of financial development is above a threshold level above the median. Our results suggest that policymakers should take the level of financial development into account when they choose macroprudential tools.

Full publication: Macroprudential Policy

Suggested Citation

Baskaya, Yusuf Soner and Kenc, Turalay and Shim, Ilhyock and Turner, Philip, Financial Development and the Effectiveness of Macroprudential Measures (September 2016). BIS Paper No. 86o, Available at SSRN: https://ssrn.com/abstract=2844273

Yusuf Soner Baskaya (Contact Author)

Government of the Republic of Turkey - Central Bank of the Republic of Turkey ( email )

Anafartalar Mah. İstiklal Cad. No:10
Ulus, Ankara 06050
Turkey

Turalay Kenc

University of London - Imperial College ( email )

Exhibition Road
London SW7 2AZ
United Kingdom
+44 20 7594 9212 (Phone)
+44 20 7823 7685 (Fax)

Ilhyock Shim

Bank for International Settlements (BIS) ( email )

78F, Two International Finance Centre
8 Finance Street, Central
Hong Kong, n/a n/a
Hong Kong

HOME PAGE: http://www.bis.org/author/ilhyock_shim.htm

Philip Turner

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
31
Abstract Views
442
PlumX Metrics