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Macroprudential regulation and bank risk: The role of shareholders' and creditors' rights

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  • Matos, Tiago F.A.
  • Teixeira, João C.A.
  • Dutra, Tiago M.

Abstract

This paper analyzes whether the effect of macroprudential policies on bank risk is channeled through investors' protection using panel data from a sample of 624 banks from 40 countries. We show that investors' protection plays a significant role in the effect of macroprudential policies on bank risk, which translates into higher efficiency for macroprudential policies in countries with highly protected creditors, whereas there is a loss of effectiveness in countries where shareholders are highly protected. We provide further evidence that the impact of loosening a macroprudential policy is asymmetric (and more pronounced) compared with the adoption or tightening of a macroprudential policy.

Suggested Citation

  • Matos, Tiago F.A. & Teixeira, João C.A. & Dutra, Tiago M., 2024. "Macroprudential regulation and bank risk: The role of shareholders' and creditors' rights," Global Finance Journal, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:glofin:v:59:y:2024:i:c:s1044028323001151
    DOI: 10.1016/j.gfj.2023.100920
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    More about this item

    Keywords

    Banks’ risk; Investors’ protection; Macroprudential policies;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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