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What motives and conditions drive countries to adopt macroprudential and capital management measures?

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  • Nieminen, Mika
  • Norring, Anni

Abstract

Countries choose diverse policy mixes of macroprudential and capital flow management measures, yet the drivers behind these policy choices remain largely unexplored. We identify potential conditions for the adoption and determinants of the use of macroprudential and capital flow management measures from the theoretical literature and test them empirically. Rich and high-growth economies tend to rely on macroprudential policy measures, while the use of capital flow management measures decreases as the regulatory environment improves. Countries with a large foreign bank presence tend to implement fewer macroprudential and capital flow management measures.

Suggested Citation

  • Nieminen, Mika & Norring, Anni, 2025. "What motives and conditions drive countries to adopt macroprudential and capital management measures?," BOFIT Discussion Papers 3/2025, Bank of Finland Institute for Emerging Economies (BOFIT).
    • Handle: RePEc:zbw:bofitp:315479
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    More about this item

    Keywords

    Macroprudential policy; Capital controls; Foreign banks;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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