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Institutionalization and Effectiveness of Macroprudential Policy: Evidence from Latin American Countries

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Listed:
  • Leonardo Aparecido Santos Silva
  • Marcos Roberto Vasconcelos

Abstract

This work analyzes the relationship between macroprudential policy and different credit balances in Latin America distinguishing between loosening and tightening regulatory direction and focusing on the individual impact of each macroprudential instrument. Using quarterly data for ten countries covering the 2000-2019 period and employing panel OLS with fixed effects and covariance matrix, corrected by Arellano’s method, we analyze the full sample and compare the pre-and-post 2009 subperiods to assess the role of intensifying macroprudential policy institutionalization on its effectiveness. Positive results were predominant for the total, corporate, and real estate credit balance in the loosening measures. The tightening occurred in the balance of consumer credit and real estate. These effects, mainly from 2009 onwards, with the beginning of the institutionalization of macroprudential policy. The findings contribute to a more granular understanding of macroprudential policy impact, highlighting the importance of policy direction, specific instruments, credit type and the institutional context in Latin America.

Suggested Citation

  • Leonardo Aparecido Santos Silva & Marcos Roberto Vasconcelos, 2025. "Institutionalization and Effectiveness of Macroprudential Policy: Evidence from Latin American Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 17(11), pages 1-28, November.
    • Handle: RePEc:ibn:ijefaa:v:17:y:2025:i:11:p:28
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    References listed on IDEAS

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    1. Apergis, Nicholas & Aysan, Ahmet F. & Bakkar, Yassine, 2022. "Borrower- and lender-based macroprudential policies: What works best against bank systemic risk?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 80(C).
    2. Markus K. Brunnermeier & Lasse Heje Pedersen, 2009. "Market Liquidity and Funding Liquidity," The Review of Financial Studies, Society for Financial Studies, vol. 22(6), pages 2201-2238, June.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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