Credit Growth and the Effectiveness of Reserve Requirements and Other Macroprudential Instruments in Latin America

June 1, 2012

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Format: Chicago

Credit Growth and the Effectiveness of Reserve Requirements and Other Macroprudential Instruments in Latin America, (USA: International Monetary Fund, 2012) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Over the past decade policy makers in Latin America have adopted a number of macroprudential instruments to manage the procyclicality of bank credit dynamics to the private sector and contain systemic risk. Reserve requirements, in particular, have been actively employed. Despite their widespread use, little is known about their effectiveness and how they interact with monetary policy. In this paper, we examine the role of reserve requirements and other macroprudential instruments and report new cross-country evidence on how they influence real private bank credit growth. Our results show that these instruments have a moderate and transitory effect and play a complementary role to monetary policy.

Subject: Bank credit, Banking, Central bank policy rate, Credit, Financial sector policy and analysis, Financial services, Macroprudential policy instruments, Monetary policy, Money, Reserve requirements

Keywords: Bank credit, Central bank, Central bank policy rate, Countercyclical policy, Credit, Credit growth, Economic activity, Financial crisis, Foreign exchange, Global, Interest rate, Interest rate spreads, Macroprudential policy instruments, Marginal RR, Market power, Monetary transmission mechanism, Private bank, Prudential instrument, Reserve requirements, RR, RR measure, RR policy, RR shock, RRS need, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/142
Stock No:

WPIEA2012142
ISBN:

9781475503999
ISSN:

1018-5941

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