Macroprudential policy effect on the link between lending and capital ratio – the role of economic development and capital account openness
Journal Title: "Finanse" Czasopismo Komitetu Nauk o Finansach PAN - Year 2017, Vol 10, Issue 1
Abstract
In this paper we ask about the role of macroprudential policies to affect the link between lending and capital ratio in countries differing in economic development and capital account openness. To resolve this problem we apply the GMM 2-step Blundell and Bond approach to a sample covering over 60 countries. Our results show that the effect of macroprudential policies on the association between lending and the capital ratio in non-crisis periods is stronger in advanced countries than in emerging countries. Differentiating by the level of capital account openness, we find that macroprudential policies are more effective in increasing the resilience of banks and thus weakening the association between loan supply and capital ratio for relatively closed economies but less effective for relatively open economies. Generally, with our study we are able to support the view that macroprudential policy has the potential to curb the procyclical impact of bank capital on lending.
Authors and Affiliations
Małgorzata Olszak, Sylwia Roszkowska, Iwona Kowalska
Keywords
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