The countercyclical capital buffer and the composition of bank lending
61 Pages Posted: 24 Mar 2019 Last revised: 24 Feb 2022
Date Written: August 13, 2019
Do targeted macroprudential measures impact non-targeted sectors too? We investigate the compositional changes in the supply of credit by Swiss banks, exploiting their differential exposure to the activation in 2013 of the countercyclical capital buffer (CCyB) which targeted banks’ exposure to residential mortgages. We find that the additional capital requirements resulting from the activation of the CCyB are associated with higher growth in banks’ commercial lending. While banks are lending more to all types of businesses, the new macroprudential policy benefits smaller and riskier businesses the most. However, the interest rates and other costs of obtaining credit for these firms rise as well.
Keywords: macroprudential policy, spillovers, credit, bank capital, systemic risk
JEL Classification: E51, E58, E60, G01, G21, G28
Suggested Citation: Suggested Citation