An Overview of Macroprudential Policy Tools

By Stijn Claessens. Social Science Research Network, 2014

359 citations recorded by the source corpus.

Macroprudential policies—caps on loan to value ratios, limits on credit growth and other balance-sheet restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies—have become part of the policy paradigm in emerging markets and developed countries alike. But knowledge of these tools is still limited. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They may also interact with various other policies, such as monetary and microprudential, raising coordination issues. Countries, especially emerging markets, have used these tools, and analyses suggest that some of those tools reduce procyclicality and crisis risks. Yet, much remains to be studied, including the costs of such tools, as they may adversely affect resource allocations; how best to adapt these tools to a country's circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers ...

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/776252b472ebae6e3fd7259b65d4a4083ee20d6b

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

In Finance

Citations in the corpus

Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies? (2019, neutral): “Additionally, we propose a classification of macroprudential tools (see Claessens, 2014; Cerutti et al., 2017, for more insights of the classification approaches of macroprudential instruments), as shown in Table 2.”
Changes in Prudential Policy Instruments - A New Cross-Country Database (2016, methodology): “In Cerutti, Claessens, and Laeven (2015), an instrument is being used if it is written into a law or into regulatory rules.”
Macroprudential policy and bank risk (2018, background): “Cerutti, E, S Claessens and L Laeven (2017): “The use and effectiveness of macroprudential policies: New evidence”, Journal of Financial Stability, vol 28, pp 203-224.”
Where the Risks Lie: A Survey on Systemic Risk (2017, neutral): “However, we have reasons to remain optimistic as more data are becoming available, with better quality, higher frequency, and wider scope (see the G20 Data Gaps Initiative, Cerutti, Claessens, and McGuire, 2014).”
Global Waves of Debt: Causes and Consequences (2021, background): “26 For discussions of these topics, see Claessens, Kose, and Terrones (2009, 2012), Dell’Ariccia et al. (2016); Eichengreen and Arteta (2002); Gourinchas and Obstfeld (2012); Rodrik and Velasco (2002); and Schularick and Taylor (2012).”
Benefits and Costs of Bank Capital (2016, background): “Similarly, most banking crises follow periods of rapid credit growth, suggesting a role for countercyclical buffers (Borio 2014; Claessens 2014).”