Mortgage Lending, Monetary Policy, and Prudential Measures in Small Euro-Area Economies: Evidence from Ireland and the Netherlands

Everett, Mary; Haan, Jakob de; Jansen, David‐Jan; McQuade, Peter; Samarina, Anna

doi:10.2139/ssrn.3498309

Cited by 4 publications

(5 citation statements)

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“…In Norway, domestic monetary policy and accounting for foreign exchange differentials seem to be more important for understanding banks' lending. Everett et al (2020) focus on Ireland and the Netherlands and examine whether the use of macroprudential policies since the global financial crisis has affected the impact of euro-area and foreign monetary policies on mortgage lending in these two small open economies. The authors report that restrictive euro-area monetary policy shocks reduce the growth of mortgage lending.…”

Section: Resultsmentioning

confidence: 99%

“…Within the euro area (Everett et al, 2020), there is evidence that restrictive euro-area monetary policy shocks reduce the growth of mortgage lending in the Netherlands and Ireland. Stricter domestic prudential regulation (particularly measures targeted at the borrower) mitigates this effect in Ireland, but there is no significant evidence of this in the Netherlands.…”

Section: Discussionmentioning

confidence: 99%

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The Interaction Between Macroprudential Policy and Monetary Policy: Overview

et al. 2020

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This paper presents the main findings of an International Banking Research Network initiative examining the interaction between monetary policy and macroprudential policy in determining international bank lending. We give an overview on the data, empirical specifications and results of the seven papers from the initiative. The papers are from a range of core and smaller advanced economies, and emerging markets. The main findings are as follows. First, there is evidence that macroprudential policy in recipient countries can partly offset the spillover effects of monetary policy conducted in core countries. Meanwhile, domestic macroprudential policy in core countries can also affect the cross-border transmission of domestic monetary policy via lending abroad, by limiting the increase in lending by less strongly capitalised banks. Second, the findings highlight that studying heterogeneities across banks provides complementary insights to studies using more aggregate data and focusing on average effects. In particular, we find that individual bank characteristics such as bank size or G-SIB status play a first-order role in the transmission of these policies. Finally, the impacts differ considerably across prudential policy instruments, which also suggests the importance of more granular analysis.

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Section: Resultsmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

The Interaction Between Macroprudential Policy and Monetary Policy: Overview

et al. 2020

View full text Add to dashboard Cite

show abstract

“…Everett et al (2020) focus on Ireland and the Netherlands and examine whether the use of macroprudential policies since the global financial crisis has affected the impact of euro‐area and foreign monetary policies on mortgage lending in these two small open economies. The authors report that restrictive euro‐area monetary policy shocks reduce the growth of mortgage lending.…”

Section: Resultsmentioning

confidence: 99%

“…Within the euro area (Everett et al., 2020), there is evidence that restrictive euro‐area monetary policy shocks reduce the growth of mortgage lending in the Netherlands and Ireland. Stricter domestic prudential regulation (particularly measures targeted at the borrower) mitigates this effect in Ireland, but there is no significant evidence of this in the Netherlands.…”

Section: Discussionmentioning

confidence: 99%

The interaction between macroprudential policy and monetary policy: Overview

Bussière

Cao²,

Haan

et al. 2020

Rev International Economics

View full text Add to dashboard Cite

This paper presents the main findings of an International Banking Research Network initiative examining the interaction between monetary policy and macroprudential policy in determining international bank lending. We give an overview on the data, empirical specifications and results of the seven papers from the initiative. The papers are from a range of core and smaller advanced economies, and emerging markets . The main findings are as follows. First, there is evidence that macroprudential policy in recipient countries can partly offset the spillover effects of monetary policy conducted in core countries. Meanwhile, domestic macroprudential policy in core countries can also affect the cross‐border transmission of domestic monetary policy via lending abroad, by limiting the increase in lending by less strongly capitalized banks. Second, the findings highlight that studying heterogeneities across banks provides complementary insights to studies using more aggregate data and focusing on average effects. In particular, we find that individual bank characteristics such as bank size or GSIB status play a first‐order role in the transmission of these policies. Finally, the impacts differ considerably across prudential policy instruments, which also suggests the importance of more granular analysis.

show abstract

“…See, for example,Altunbas et al (2017),Eickmeier et al (2018),Everett et al (2020) andBudnik (2020).…”

mentioning

confidence: 99%

The Role of Financial Stability Considerations in Monetary Policy and the Interaction with Macroprudential Policy in the Euro Area

Albertazzi¹,

Assouan

Tristani

et al. 2021

SSRN Journal

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Since the European Central Bank's (ECB's) 2003 strategy review, the importance of macro-financial amplification channels for monetary policy has increasingly gained recognition. This paper takes stock of this evolution and discusses the desirability of further incremental enhancements in the role of financial stability considerations in the ECB's monetary policy strategy. The paper starts with the premise that macroprudential policy, along with microprudential supervision, is the first line of defence against the build-up of financial imbalances. It also recognises that the pursuit of price stability through monetary policy, and of financial stability through macroprudential policy, are to a large extent complementary. Nevertheless, macroprudential policy may not be able to ensure financial stability independently of monetary policy, because of spillovers originating from the common transmission channels through which the two policies produce their effects. For example, a low interest rate environment can create incentives to engage in more risk-taking, or can adversely impact the profitability of financial intermediaries and hence their capacity to absorb shocks. The paper argues that the existence of such spillovers creates a conceptual case for monetary policy to take financial stability considerations into account. It then goes on to discuss what this conclusion might imply in practice for the ECB. One option would be to exploit the flexible length of the medium-term horizon over which price stability is to be achieved. Longer deviations from price stability could occasionally be tolerated, if they resulted in materially lower risks for financial stability and, ultimately, for future price stability. However, model-based quantitative analysis suggests that this approach may require impractically drawn-out periods of deviation from price stability and potentially result in a de-anchoring of inflation expectations. An alternative option is to take financial stability into account by broadening the indicators and tools considered in monetary policy deliberations. An enhanced financial stability analysis of this nature would include two main elements: first, monitoring the build-up of financial vulnerabilities that can have adverse consequences for output and inflation in the not just medium term but also the longer run; and second, assessing the role of macroprudential measures in addressing those vulnerabilities and their interaction with the monetary policy stance.

show abstract

Mortgage Lending, Monetary Policy, and Prudential Measures in Small Euro-Area Economies: Evidence from Ireland and the Netherlands

Cited by 4 publications

References 30 publications

The Interaction Between Macroprudential Policy and Monetary Policy: Overview

The Interaction Between Macroprudential Policy and Monetary Policy: Overview

The interaction between macroprudential policy and monetary policy: Overview

The Role of Financial Stability Considerations in Monetary Policy and the Interaction with Macroprudential Policy in the Euro Area

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