The Micro Impact of Macroprudential Policies: Firm-Level Evidence

66 Pages Posted: 14 Jan 2019

See all articles by Meghana Ayyagari

Meghana Ayyagari

George Washington University - School of Business

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Maria Soledad Martinez Peria

International Monetary Fund (IMF)

Date Written: December 2018

Abstract

Combining balance sheet data on 900,000 firms from 48 countries with information on the adoption of macroprudential policies during 2003-2011, we find that these policies are associated with lower credit growth. These effects are especially significant for micro, small and medium enterprises (MSMEs) and young firms that, according to the literature, are more financially constrained and bank dependent. Among MSMEs and young firms, those with weaker balance sheets exhibit lower credit growth in conjunction with the adoption of macroprudential policies, suggesting that these policies can enhance financial stability. Finally, our results show that macroprudential policies have real effects, as they are associated with lower investment and sales growth.

Keywords: Macroprudential policies and financial stability, Central banks and their policies, Balance sheets, Public enterprises, financial development; macroprudential policies; firm financing, financial development, macroprudential policies, firm financing, Financial Markets and the Macroeconomy, Government Policy and Regulation

JEL Classification: E44, E58, G18, G28

Suggested Citation

Ayyagari, Meghana and Beck, Thorsten and Martinez Peria, Maria Soledad, The Micro Impact of Macroprudential Policies: Firm-Level Evidence (December 2018). IMF Working Paper No. 18/267. Available at SSRN: https://ssrn.com/abstract=3314601

Meghana Ayyagari (Contact Author)

George Washington University - School of Business ( email )

Washington, DC 20052
United States

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Maria Soledad Martinez Peria

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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