Macroprudential Regulation of Credit Booms and Busts: The Experience of the National Bank of the Republic of Macedonia

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Macroprudential Policies and Housing Prices: A New Database and Empirical Evidence for Central, Eastern, and Southeastern Europe

“…Terrier et al () describe a wide variety of MPP instruments that have been used in Latin America without systematically analyzing their effectiveness. As to the CESEE region, a series of 2011 World Bank Policy Research Working Papers describes the experience of the Czech Republic, Estonia, Macedonia, Poland, and Turkey (see Banai, Király, and Nagy , Celeska, Gligorova, and Krstevska , Frait, Gersl, and Seidler , Kenc, Turhan, and Yildirim , Kruszka and Kowalczyk , Sutt, Korju, and Siibak ) . These papers generally argue that MPPs implemented during the boom helped improve the resilience of the banking system during the bust.…”

Macroprudential Policy Effectiveness: Lessons from Southeastern Europe

“…Many studies of CESEE economies focus on how various types of MPPs helped regulate credit growth during the latest boom-bust cycle in individual countries 6 -Estonia (Sutt, Korju, and Siibak (2011)), Hungary (Banai, Király, and Nagy (2011)), Macedonia (Celeska, Gligorova, and Krstevska (2011)), and Poland (Kruszka and Kowalczyk (2011)). Of particular relevance to our study is Galac (2010) who finds that credit growth ceilings, MRR on foreign borrowing, foreign currency liquidity ratio measures, and high capital adequacy requirements were particularly useful in building liquidity and capital buffers, but less effective in slowing down credit growth and capital inflows.…”

Financial Stability Challenges for EU Acceding and Candidate Countries: Making Financial Systems More Resilient in a Challenging Environment

“…For instance, as of 2006, the National Bank of the Republic of 44 Macedonia (NBRM) adopted regulations on the conditions for granting loans denominated in or indexed to foreign currency (Celeska et al, 2011). Since July 2009 the NBRM has imposed differentiated reserve requirement ratios for bank liabilities in domestic and in foreign currency (see Table A3.…”