Using an international sample of 95 banks from 21 European and North American countries spanning from 2008 to 2014, this paper assesses the effectiveness of a large set of general and housing macro-prudential policies in controlling banks' systemic importance and risk-taking incentives. Empirical findings indicate that tightening the general capital requirements, sector specific capital buffers, along with housing countercyclical capital requirements and Debt-Service-to-Income lending criteria significantly reduce banks' contribution to systemic risk and their individual risk-taking. A similar effect has been obtained for loosening real estate loans loss provisioning. Furthermore, the nexus between macroprudential policies and banks' risk is shaped through several channels like bank size, the share of foreign bank assets, banking sector competition and the independence of supervisory authority.

In this paper we assess the effectiveness of macroprudential policies in ensuring a sustainable contribution of the financial sector to economic growth. Our results sustain that macroprudential policies have beneficial effects on economic growth, expressed by the GDP per capita growth rate. Macroprudential policies, adopted to strengthen the resilience of the financial system and decrease the buildup of systemic risks, contribute to the economic growth by assuring a stable financial system, and, therefore, a healthier financial-macro relationship. Macroprudential policies that target financial institutions have greater impact on real economy compared with borrower-related macroprudential policies.

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This paper reviews the measures adopted by central banks from the most important economies during the crisis and assess their effectiveness. It is important for policy makers to identify which measures were effective in limiting the financial system distress in order to adopt the appropiate measure during future crisis. In case of US, TARP was the most important program for banking system and it was effective in reducing banks’ contribution to systemic risk and banks’ default probabilities. But TARP also conducted to a reduction in loans growth and create incentives for higher risk-taking behavior. The unconventional monetary policies adopted by ECB during the period 2008- 2016 reduced the impact of the crisis on the European economy and achieved their objectives: to support banks’ funding and to increase lending to real economy (LTROs), to calm tensions from bond markets (CBPP, SMP, OMT), to support economic activity and to stabilize inflation rate (SMP, OMT, LTROs, APP).