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Macroprudential Policies, Economic Growth, and Banking Crises
Author:
Mohamed Belkhir null

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Samy Ben Naceur
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Bertrand Candelon null

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Jean-Charles Wijnandts null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2020: Issue 065
Language:
English
Publication Date:
22 May 2020
DOI:
https://doi.org/10.5089/9781513536989.001
ISBN:
9781513536989
ISSN:
1018-5941
Pages:
54
Keywords:
WP; policy; policy tightening; Macroprudential Policies; Banking crises; Economic Growth; prudential policy; macroprudential policy; crisis probability; macropru-dential policy; crisis index; tools lead; countercyclical policy tool; banking crisis database; policy instrument; policy tool; macropudential policy; Macroprudential policy; Systemic crises; Emerging and frontier financial markets; Global; aggregate mpi
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Using a sample that covers more than 100 countries over the 2000-2017 period, we assess the impact of macroprudential policies on financial stability. In particular, we examine whether the activation of macroprudential policies is conducive to a lower incidence of systemic banking crises. Our empirical setup is designed to account for the potential direct and indirect effects that macroprudential policies can have on banking crises. We find that while macro-prudential policies exert a direct stabilizing effect, they also have an indirect destabilizing effect, which works through the depressing of economic growth. A Generalized Impulse Response Function analysis of a dynamic system composed of the probability of a banking crisis and economic growth reveals, however, that macroprudential policies have a positive net effect on financial stability (lower likelihood of systemic banking crises).
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund