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Macroprudential policies, economic growth and banking crises

Author

Listed:
  • Belkhir, Mohamed
  • Ben Naceur, Sami
  • Candelon, Bertrand

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Wijnandts, Jean-Charles

Abstract

Using a sample covering emerging market and advanced economies, we assess the impact of macroprudential policies on financial stability. Our empirical setup is designed to account for the potential direct and indirect effects that macroprudential policies can have on banking crises. We find that while macroprudential policies (MPPs) exert a direct stabilizing effect, they also have an indirect destabilizing effect, which works through the depressing of economic growth. It turns out that mitigating effects of MPPs on the likelihood of banking crises is more pronounced in emerging market economies relative to advanced economies.

Suggested Citation

  • Belkhir, Mohamed & Ben Naceur, Sami & Candelon, Bertrand & Wijnandts, Jean-Charles, 2022. "Macroprudential policies, economic growth and banking crises," LIDAM Reprints LFIN 2022013, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2022013
    DOI: https://doi.org/10.1016/j.ememar.2022.100936
    Note: In: Emerging Markets Review, 2022, vol. 53, 100936
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    Cited by:

    1. Zoë Venter, 2022. "Macroprudential policy under uncertainty," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(2), pages 161-209, May.
    2. Nistor, Simona & Fărcaș, Ioana Georgiana, 2025. "Does national culture affect macroprudential policy? An international investigation of regulatory behavior on macroprudential interventions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 45(C).
    3. Alexandr Patalaha & Maria A. Shchepeleva, 2023. "Bank Crisis Management Policies and the New Instability," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 43-60, December.
    4. Dimitris Anastasiou & Fotios Pasiouras & Anastasios Rizos & Artemis Stratopoulou, 2025. "Macroprudential policies and discouraged borrowers: evidence from European SMEs," Small Business Economics, Springer, vol. 65(4), pages 2567-2603, December.
    5. Le Thanh Ha, 2025. "Deploying green macroprudential policies to promote environmental health: new findings from panel VAR for international database," Environment Systems and Decisions, Springer, vol. 45(3), pages 1-21, September.
    6. Ansori, Moch. Fandi & Brianzoni, Serena & Campisi, Giovanni, 2024. "Bifurcations and complex dynamics in a banking duopoly model with macroprudential policy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 641(C).
    7. Antonio Focacci, 2023. "A Wavelet Investigation of Periodic Long Swings in the Economy: The Original Data of Kondratieff and Some Important Series of GDP per Capita," Economies, MDPI, vol. 11(9), pages 1-21, September.
    8. Candelon, Bertrand & Hasse, Jean-Baptiste, 2023. "Testing for causality between climate policies and carbon emissions reduction," Finance Research Letters, Elsevier, vol. 55(PA).
    9. Tiago F. A. Matos & João C. A. Teixeira & Tiago M. Dutra, 2025. "The role of market discipline and macroprudential policies in achieving bank stability," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 2085-2107, July.
    10. Kerola, Eeva & Norring, Anni, 2025. "Effect of the countercyclical capital buffer on firm loans: Evidence from Germany," Bank of Finland Research Discussion Papers 8/2025, Bank of Finland.
    11. Lloyd, Simon & Fernández-Gallardo, Álvaro & Manuel, Ed, 2023. "The transmission of macroprudential policy in the tails: evidence from a narrative approach," ESRB Working Paper Series 145, European Systemic Risk Board.
    12. Mikhail I. Stolbov & Maria A. Shchepeleva & Alexander M. Karminsky, 2021. "A global perspective on macroprudential policy interaction with systemic risk, real economic activity, and monetary intervention," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-25, December.
    13. Madeira, Carlos, 2024. "The impact of macroprudential policies on industrial growth," Journal of International Money and Finance, Elsevier, vol. 145(C).
    14. Kristin J. Forbes, 2021. "The International Aspects of Macroprudential Policy," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 203-228, August.
    15. Salma Gallas & Houssam Bouzgarrou & Montassar Zayati, 2024. "Balancing financial stability and economic growth: a comprehensive analysis of macroprudential regulation," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(4), pages 1005-1033, December.
    16. Tihana Škrinjarić, 2024. "Growth-at-risk for macroprudential policy stance assessment: a survey," Bank of England working papers 1075, Bank of England.
    17. Tiago F. A. Matos & João C. A. Teixeira & Tiago M. Dutra, 2023. "The contribution of macroprudential policies to banks' resilience: Lessons from the systemic crises and the COVID‐19 pandemic shock," International Review of Finance, International Review of Finance Ltd., vol. 23(4), pages 794-830, December.
    18. Katharina Bergant & Kristin Forbes, 2023. "Macroprudential Policy during COVID-19: The Role of Policy Space," World Scientific Book Chapters, in: Claudio Borio & Edward S Robinson & Hyun Song Shin (ed.), MACRO-FINANCIAL STABILITY POLICY IN A GLOBALISED WORLD: LESSONS FROM INTERNATIONAL EXPERIENCE Selected Papers from the Asian Monetary Policy Forum 202, chapter 8, pages 130-174, World Scientific Publishing Co. Pte. Ltd..
    19. Sifundo Ntokozo Dlamini & Lindokuhle Talent Zungu & Nomusa Yolanda Nkomo, 2023. "The Optimal Level of Financial Growth in View of a Nonlinear Macroprudential Policy Regime Model: A Bayesian Approach," JRFM, MDPI, vol. 16(4), pages 1-21, April.
    20. Kukk, Merike & Levenko, Natalia, 2024. "Measuring the effects of borrower-based policies on new housing loans," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 666-684.
    21. Chokri Zehri & Zagros Madjd‐Sadjadi, 2024. "Capital flow management and monetary policy to control credit growth," Economics and Politics, Wiley Blackwell, vol. 36(2), pages 637-676, July.
    22. Nguyen, Thi Anh Nhu, 2022. "The role of institutional quality in bank deposit growth In European transition economies," Finance Research Letters, Elsevier, vol. 47(PA).
    23. Alter, Adrian & Hlayhel, Bashar & Kroen, Thomas & Piontek, Thomas, 2025. "Are higher interest rates a concern for financial stability in MENA?," Emerging Markets Review, Elsevier, vol. 69(C).

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    Keywords

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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