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Macroprudential, Monetary Policy Synergies and Credit Supply: evidence from matched bank-firm loan-level data in Brazil

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  • Rodrigo Barbone Gonzalez
  • Bernardus F. Nazar Van Doornik
  • João Barata R. B. Barroso

Abstract

This paper estimates the impact of countercyclical reserve requirements (RRs) on credit. We explore differential bank exposure to RRs in matched bank-firm loan-level data from Brazil, where RRs have been used extensively to pursue financial stability. We find that, after tightening RRs, more exposed banks reduce credit to firms; after loosening, they expand credit supply. During booms, private domestic banks with lower capital adequacy are more responsive to a tightening of RRs and to a simultaneous tightening of the short-term policy rate. We also find that higher levels of economic policy uncertainty weaken this channel, and real effects in employment are modest

Suggested Citation

  • Rodrigo Barbone Gonzalez & Bernardus F. Nazar Van Doornik & João Barata R. B. Barroso, 2024. "Macroprudential, Monetary Policy Synergies and Credit Supply: evidence from matched bank-firm loan-level data in Brazil," Working Papers Series 607, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:607
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