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Macroprudential policy, mortgage lending and economic activity in Mexico

Author

Listed:
  • Liliana Celedón-Cabriales

    (Universidad de Monterrey (UDEM))

  • Alejandra E. Martínez-hidalgo

    (Universidad de Monterrey (UDEM))

  • Abigahil Meléndez Kamila Sánchez

    (Universidad de Monterrey (UDEM))

  • Patricia Kaory Tamez-González

    (Universidad de Monterrey (UDEM))

  • Carlos A. Carrasco

    (Universidad de Monterrey (UDEM))

Abstract

The global financial crisis revealed the insufficiency of the microprudential approach in containing systemic risks associated with the procyclicality of credit and the build-in of bubbles in financial markets. Since then, different macroprudential regulation tools have been implemented, strengthening regulatory bodies and improving the monitoring of the financial system. In this regard, there is evidence of the macroprudential policy effectiveness in reducing the procyclicality of credit in developed countries. However, the literature on macroprudential policy in Mexico is scarce. This note presents preliminary results contributing to the literature by analyzing the relationship between macroprudential policy, economic activity, and credit in three segments of the Mexican mortgage market. We analyze the period 2009-2020 through the implementation of least squares with breakpoints in the total balances of mortgage credit. Our results show a decrease in the procyclicality of mortgage credit in the construction and new housing segments. In contrast, the used housing credit is decoupled from the economic cycle.

Suggested Citation

  • Liliana Celedón-Cabriales & Alejandra E. Martínez-hidalgo & Abigahil Meléndez Kamila Sánchez & Patricia Kaory Tamez-González & Carlos A. Carrasco, 2024. "Macroprudential policy, mortgage lending and economic activity in Mexico," Economics Bulletin, AccessEcon, vol. 44(1), pages 154-162.
    • Handle: RePEc:ebl:ecbull:eb-23-00278
    as

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    References listed on IDEAS

    as
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    2. Gabriel Jiménez & Steven Ongena & José-Luis Peydró & Jesús Saurina, 2017. "Macroprudential Policy, Countercyclical Bank Capital Buffers, and Credit Supply: Evidence from the Spanish Dynamic Provisioning Experiments," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 2126-2177.
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    5. Yuliya Demyanyk & Otto Van Hemert, 2011. "Understanding the Subprime Mortgage Crisis," The Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1848-1880.
    6. Bai, Jushan, 1997. "Estimating Multiple Breaks One at a Time," Econometric Theory, Cambridge University Press, vol. 13(3), pages 315-352, June.
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    More about this item

    Keywords

    Macroprudential policy; Economic activity; Mortgage loans; Financial regulation;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G1 - Financial Economics - - General Financial Markets

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