Bank-By-Bank Credit Ceilings: Issues and Experiences

Abstract

This is a Working Paper and the author(s) would welcome any comments on the present iext Citations should refer to a Working Paper of the International Monetary Fund, mentioning the authors), and the date of issuance. The views expressed are those of the authors) and do not necessarily represent those of the Fund.

Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?

“…Maximum credit ceilings to certain carbon-intensive or polluting activities (sectors), or alternatively minimum credit floors, that require banks to allocate a predefined fraction of their loans' portfolio to a "green" sector, are thus worth considering for the aim of closing the green finance gap. In contrast to a maximum credit ceiling (Farahbaksh and Sensenbrenner, 1996), which creates incentives for banks to limit lending to less sustainable sectors, the minimum credit floor is a "hard" limit set by the regulatory authority.…”

Monetary Policy without Interest Rates: Evidence from France’s Golden Age (1948 to 1973) Using a Narrative Approach

“…Building an index of several instruments is made too dicult by the impossibility to weight the importance of each of them and, most of all, by the fact that most of them are discontinuous and were used over a part of the period only. Furthermore, using interest rates or spreads would lead to inconsistent results since the aim of quantitative credit ceilings is by nature to distort or to downplay the role of prices in the allocation process (McKinnon 1973, van Wijnbergen 1983, Farahbaksh and Sensenbrenner 1996, Demetriades and Luintel 2001, and Monnet 2011b. 6 Using the money supply as a measure of monetary policy would also be unsatisfactory since it would miss the potential direct short term eects of credit controls on production (Romer and Romer 1994a).…”

“…12 The standard and seminal reference is Gordon and Leeper (1992). 8 1973, Alexander et al 1995, Farahbaksh and Sensenbrenner 1996, De Melo and Denizer 1997, do not rely on a well specied model of the economy. On the contrary, the usual dynamic stochastic general equilibrium models that are used nowadays to assess the role of monetary policy rely on interest rate policies and include credit only as a provider of frictions that can amplify other kind of shocks.…”

Monetary Policy Without Interest Rates: Evidence from France 's Golden Age (1948-1973) Using a Narrative Approach

“…Building an index of several instruments is made too dicult by the impossibility to weight the importance of each of them and, most of all, by the fact that most of them are discontinuous and were used over a part of the period only. Furthermore, using interest rates or spreads would lead to inconsistent results since the aim of quantitative credit ceilings is by nature to distort or to downplay the role of prices in the allocation process (McKinnon 1973, van Wijnbergen 1983, Farahbaksh and Sensenbrenner 1996, Demetriades and Luintel 2001, and Monnet 2011b. 6 Using the money supply as a measure of monetary policy would also be unsatisfactory since it would miss the potential direct short term eects of credit controls on production (Romer and Romer 1994a).…”