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Assessing the impact of a policy on reserve requirements: loan-level evidence

Author

Listed:
  • Cecilia Dassatti

    (Banco Central del Uruguay)

Abstract

During the first half of 2008, the Central Bank of Uruguay introduced changes in the regulation of reserve and liquidity requirements, increasing the requirements for short-term funding and funding from non-residents as well as introducing a requirement for interbank funding. The combination of these reforms with data that follows all loans granted to non-financial firms in Uruguay, allows me to identify their impact on the supply of credit. Following a difference-in-difference approach, I compare lending before and after the introduction of the policy changes among banks with different degrees of exposition to the funds targeted by the policies. The results suggest that restrictions to short-term finance from banks imply a reduction of credit availability as predicted by the literature.

Suggested Citation

  • Cecilia Dassatti, 2023. "Assessing the impact of a policy on reserve requirements: loan-level evidence," Documentos de trabajo 2023001, Banco Central del Uruguay.
    • Handle: RePEc:bku:doctra:2023001
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    File URL: https://www.bcu.gub.uy/Estadisticas-e-Indicadores/Documentos%20de%20Trabajo/1.2023.pdf
    File Function: First version, 2023
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    More about this item

    Keywords

    banks; reserve requirements; monetary policy; macroprudential policy;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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