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Macro prudential policies from a micro prudential angle

Author

Listed:
  • Cordella, Tito
  • Pienknagura, Samuel

Abstract

The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks'risk choices and shows that different prudential instruments affect banks'risk-taking incentives differently. Thus, conflicts may arise between the micro and macro prudential stance.

Suggested Citation

  • Cordella, Tito & Pienknagura, Samuel, 2013. "Macro prudential policies from a micro prudential angle," Policy Research Working Paper Series 6721, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6721
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    References listed on IDEAS

    as
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    8. Cordella, Tito & Yeyati, Eduardo Levy, 2003. "Bank bailouts: moral hazard vs. value effect," Journal of Financial Intermediation, Elsevier, vol. 12(4), pages 300-330, October.
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    Cited by:

    1. Zhao, Yang & Goodell, John W. & Wang, Yong & Abedin, Mohammad Zoynul, 2023. "Fintech, macroprudential policies and bank risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    2. de la Torre, Augusto & Ize, Alain, 2013. "The foundations of macroprudential regulation : a conceptual roadmap," Policy Research Working Paper Series 6575, The World Bank.
    3. Tito Cordella & Pablo M. Federico & Carlos A. Vegh & Guillermo Vuletin & Guillermo Vuletin, 2014. "Reserve Requirements in the Brave New Macroprudential World," World Bank Publications - Books, The World Bank Group, number 17584, April.

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