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Does governance quality enhance the efficacy of macroprudential policy?

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  • Saha, Mallika
  • Dutta, Kumar Debasis

Abstract

This paper explores the role of governance quality (GQ) in assisting macroprudential regulations (MPRs) to minimize the financial risk (FR). We collect data of 124 countries over 2000–2017 years and estimate the joint-impact of GQ and MPRs applying advanced econometric methods that deal with the endogeneity and ensure the robustness. Our results confirm that the role of GQ in MPRs–FR interaction depends on the nature of MPR instruments. These findings are critical for devising policies to preserve financial stability (FS).

Suggested Citation

  • Saha, Mallika & Dutta, Kumar Debasis, 2021. "Does governance quality enhance the efficacy of macroprudential policy?," Economics Letters, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:ecolet:v:204:y:2021:i:c:s0165176521001634
    DOI: 10.1016/j.econlet.2021.109886
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    References listed on IDEAS

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    9. Gaganis, Chrysovalantis & Lozano-Vivas, Ana & Papadimitri, Panagiota & Pasiouras, Fotios, 2020. "Macroprudential policies, corporate governance and bank risk: Cross-country evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 126-142.
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    Cited by:

    1. Oskar Kowalewski & Pawel Pisany, 2022. "Home–Host Distance in Governance Quality, Foreign Banks’ Lending, and Emerging Host Markets’ Resilience," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 12(1), pages 55-69.
    2. repec:zbw:qmsrps:279524 is not listed on IDEAS
    3. Kishwar Ali & Hu Hongbing & Chee Yoong Liew & Du Jianguo, 2023. "Governance perspective and the effect of economic policy uncertainty on financial stability: evidence from developed and developing economies," Economic Change and Restructuring, Springer, vol. 56(3), pages 1971-2002, June.

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