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Experiences from the MNB's Green Preferential Capital Requirement Programme and the Extension of the Programme

Author

Listed:
  • Donat Kim

    (Magyar Nemzeti Bank, Corvinus University of Budapest)

  • Eszter Raciborski

    (Magyar Nemzeti Bank)

  • Balint Vargedo

    (Magyar Nemzeti Bank, Corvinus University of Budapest)

Abstract

The study examines the Green Preferential Capital Requirement Programmes of the Magyar Nemzeti Bank, with a special focus on their extension, and presents the information on which the decision is based, the theoretical background of the programmes, the international regulatory environment, the mechanism of the preferential capital requirement and the results of the programmes. The results and feedback from market participants suggest that the preferential capital requirement programmes have a market and institutional development impact across the financial institutions system. From a prudential perspective, the green preferential capital requirement programmes did not have a material negative impact: they reduced banks' capital requirements by up to 0.31 per cent only. In view of the positive results, having been extended for a uniform period, these programmes are expected to continue to encourage green lending.

Suggested Citation

  • Donat Kim & Eszter Raciborski & Balint Vargedo, 2024. "Experiences from the MNB's Green Preferential Capital Requirement Programme and the Extension of the Programme," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 23(3), pages 193-209.
    • Handle: RePEc:mnb:finrev:v:23:y:2024:i:3:p:193-209
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    References listed on IDEAS

    as
    1. Benetton, Matteo & Eckley, Peter & Garbarino, Nicola & Kirwin, Liam & Latsi, Georgia, 2021. "Capital requirements and mortgage pricing: Evidence from Basel II," Journal of Financial Intermediation, Elsevier, vol. 48(C).
    2. Christoph Basten, 2020. "Higher Bank Capital Requirements and Mortgage Pricing: Evidence from the Counter-Cyclical Capital Buffer," Review of Finance, European Finance Association, vol. 24(2), pages 453-495.
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