Effectiveness of Macroprudential Policies in Developing Asia: An Empirical Analysis

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The views expressed in this paper are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. Terms of use: Documents inADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.By making any designation of or reference to a particular territory or geographic area, or by using the term "country" in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Notes: 1. In this publication, "$" refers to US dollars. 2. ADB recognizes "China" as the People's Republic of China and "Hong Kong" as Hong Kong, China.The ADB Economics Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness.

The Behaviour of Banking Financial Stability in ASEAN‐5

“…This finding completes the unfinished puzzle from previous estimation. This result is in accordance with the empirical studies of Wimanda et al (2014), Lee et al (2015) and Lim et al (2011). Therefore, the argument that LTV instrument which capable in affecting intermediate objective (credit risk) but not effectively affecting overall risk can be explained by this model.…”

“…The last category consists of empirical studies which show that macroprudential policy is effective in influencing intermediate objectives. Lee et al (2015) found that credit-related policies significantly decrease credit expansion and housing price rise, whereas liquidity-related policies effectively reduce leverage and rapid increase in housing price. Claessens et al (2014) and Lim et al (2011) found consistent results in assessing the impact of macroprudential policy instruments on financial stability.…”

Measuring the restrictiveness of (macro)prudential policy: the case of bank capital regulation in Poland

“…A number of studies attempted to address this problem. Tillmann [ 52 ] and Lee et al [ 44 ] employed a Qual VAR (VAR augmented by qualitative variables) to convert binary data on macroprudential shocks into more continuous ones. Zhang and Tressel [ 55 ] mapped various macroprudential policy instruments to factors that affect changes in bank lending standards (for example, they did not use dummies for LTV requirements, but looked at changes in LTV lending standards from bank surveys).…”

Foreign Investment and the Political Economy of Indonesian Capital Market in 2015-2016

“…The policy is taken by Bank Indonesia, other than adjusting the Benchmark Interest Rate, which is to run the macroprudential policy. Macroprudential policy is a measure taken to maintain the stability of the financial system, comprehensively oriented, and to minimize systematic risk (Bank Indonesia, 2016;Lee, Asuncion, & Kim, 2016). Systematic risk is a risk that causes the loss of public trust and the increase of uncertainty within the financial system, disrupting the progress of the financial system and economic process (Bank Indonesia, 2016: 4).…”