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Credit cycles and capital flows: Effectiveness of the macroprudential policy framework in emerging market economies

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  • Fendoğlu, Salih

Abstract

I assess the effectiveness of macroprudential policy tools in containing credit cycles per se or the impact of portfolio inflows on the cycles in major emerging market economies. The results show that borrower-based tools, measures with a domestic focus, and domestic reserve requirements are particularly effective. The findings are, in most cases, stronger for the recent period during which most of the macroprudential actions are undertaken, and generally hold for alternative definitions of credit cycle, the monetary policy stance, and portfolio inflows. Weaker results emerge for financial-institutions-based or foreign-currency related macroprudential tools.

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  • Fendoğlu, Salih, 2017. "Credit cycles and capital flows: Effectiveness of the macroprudential policy framework in emerging market economies," Journal of Banking & Finance, Elsevier, vol. 79(C), pages 110-128.
    • Handle: RePEc:eee:jbfina:v:79:y:2017:i:c:p:110-128
    DOI: 10.1016/j.jbankfin.2017.03.008
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    More about this item

    Keywords

    Credit cycles; Capital flows; Macroprudential policies; Reserve requirements; Emerging market economies.;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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