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The effectiveness of macro-prudential policies in the face of global uncertainty –the role of exchange-rate regimes

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  • Ghosh, Taniya
  • Kumar, Shakti

Abstract

The paper analyses the effects of world uncertainty on the level of domestic credit growth rate and the role of macro-prudential policies (Mapps) in mitigating these effects in a panel of 33 countries under different exchange rate regimes. A higher level of world uncertainty decreases the level of domestic credit under both fixed- and flexible-exchange rate regimes, but these spill-over effects are higher for countries with fixed-exchange rate regimes. The Mapps have a significant impact on financial conditions and help to achieve long-term financial stability, but only for countries under the flexible-exchange regime. It remains completely ineffective for the fixed-exchange economies.

Suggested Citation

  • Ghosh, Taniya & Kumar, Shakti, 2022. "The effectiveness of macro-prudential policies in the face of global uncertainty –the role of exchange-rate regimes," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003627
    DOI: 10.1016/j.frl.2021.102358
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    References listed on IDEAS

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    More about this item

    Keywords

    Global uncertainty; Macro-prudential policy; Exchange-rate regime; Financial stability; World uncertainty index; Global economic policy uncertainty;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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