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Unregulated Lending, Mortgage Regulations and Monetary Policy

Author

Listed:
  • Ugochi Emenogu
  • Brian Peterson

Abstract

Macroprudential policies are often aimed at the traditional banking sector while non-depository financial institutions or shadow banks have limited or no prudential regulations. This paper studies the macroeconomic impact of household-side macroprudential tightening in the presence of unregulated lenders. Our result shows that the presence of unregulated lenders dampens the impact of the policies on house prices and household debt. We also find that leakage to the unregulated sector increases when monetary policy is tightened.

Suggested Citation

  • Ugochi Emenogu & Brian Peterson, 2022. "Unregulated Lending, Mortgage Regulations and Monetary Policy," Staff Working Papers 22-28, Bank of Canada.
    • Handle: RePEc:bca:bocawp:22-28
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    References listed on IDEAS

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    Keywords

    Financial institutions; Financial system regulation and policies; Monetary policy transmission;
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