Electoral Cycles in Macroprudential Regulation

67 Pages Posted: 22 Apr 2018 Last revised: 23 Dec 2022

See all articles by Karsten Müller

Karsten Müller

National University of Singapore

Multiple version iconThere are 2 versions of this paper

Date Written: February 23, 2022


Do politics matter for macroprudential policies? I show that changes in macroprudential regulation exhibit a predictable electoral cycle in the run-up to 221 elections across 58 countries from 2000 through 2014. Policies restricting mortgages and consumer credit are systematically looser before elections, particularly during economic expansions. Consistent with theories of opportunistic political cycles, this pattern is stronger when election outcomes are uncertain, regulators are closely tied to politicians, and institutions are poor. These results suggest that political pressures may limit the ability of regulators to “lean against the wind.”

Keywords: Macroprudential Regulation, Electoral Cycle, Regulatory Cycle, Political Economy, Central Bank Independence

JEL Classification: G18, G21, G28, D72, D73, P16

Suggested Citation

Müller, Karsten, Electoral Cycles in Macroprudential Regulation (February 23, 2022). Available at SSRN: https://ssrn.com/abstract=3159086 or http://dx.doi.org/10.2139/ssrn.3159086

Karsten Müller (Contact Author)

National University of Singapore

15 Kent Ridge Dr

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