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Heterogenous Impacts of Macroprudential Policies: Financial Advisors, Regulatory Caps, and Mortgage Risk

Author

Listed:
  • Martin Cesnak

    (National Bank of Slovakia)

  • Andrej Cupak

    (National Bank of Slovakia)

  • Pirmin Fessler

    (Oesterreichische Nationalbank)

  • Jan Klacso

    (National Bank of Slovakia)

Abstract

This paper examines the impact of borrower-based macroprudential policy tightening on mortgage lending in Slovakia, focusing in particular on the role of financial advisors in shaping loan characteristics. Using a comprehensive loan-level dataset from Slovak banks, weanalyzetheeffectsofkeyregulatorytools—Loan-to-Value(LTV),Debt-to-Income(DTI), and Debt Service-to-Income (DSTI) limits — on mortgage risk profiles. Our contributions include: (1) showing that restrictive borrower-based measures (BBMs) reduce the riskiest loans but push lower-risk segments toward regulatory thresholds, thus increasing portfolio risk; (2) demonstrating that advisor-mediated loans tend to have higher amounts, LTVs, DTIs, and longer maturities, raising their riskiness; and (3) finding that strict enough DSTI limits not only reduce DSTI but may also indirectly effect other loan characteristics, such as DTI, LTV ratios, and loan volumes, suggesting broader policy impacts. Additionally, we identifysignificantfront-loadingbehaviorfollowingpolicytighteningannouncements, par-ticularly for advisor-mediated loans. These findings highlight the importance of detailed micro-level data in capturing policy effects and informing more effective macroprudential regulation.

Suggested Citation

  • Martin Cesnak & Andrej Cupak & Pirmin Fessler & Jan Klacso, 2025. "Heterogenous Impacts of Macroprudential Policies: Financial Advisors, Regulatory Caps, and Mortgage Risk," Working and Discussion Papers WP 3/2025, Research Department, National Bank of Slovakia.
    • Handle: RePEc:svk:wpaper:1118
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    References listed on IDEAS

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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