Working paper: macroprudential policy and bank versus non-bank credit

Macroprudential policy is being implemented worldwide. A new DNB working paper confirms that macroprudential policies reduce bank credit growth, both in advanced economies and emerging market economies. Yet the study also finds evidence of a substitution towards non-bank credit, especially in advanced economies. This reduces the policies’ effect on total credit. The results indicate a need to extend macroprudential policy beyond banking.

Figure - Cumulative excess credit growth rates around macroprudential measures. Cumulative excess growth rate (y axis) by quarter relative to the activation of a macroprudential measure (x axis)

Source: authors' calculations

Keywords: Financial cycle, macroprudential regulation, financial supervision, (shadow) banking.
JEL classifications: E58, G10, G18, G20, G58.