Effective Macroprudential Policy: Cross-Sector Substitution from Price and Quantity Measures

Janko Cizel, Jon Frost, Aerdt Houben, Peter Wierts

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Macroprudential policy is increasingly being implemented worldwide, and is mostly applied to banks. A key question is whether this prompts substitution toward nonbank credit. Using two different global data sets on macroprudential measures and different methodologies, including detrended series, panel estimations, and propensity score matching, we find evidence of such substitution. Substitution toward nonbank credit appears to be stronger when policy measures are binding and are implemented in economies with well-developed nonbank credit markets. This substitution partially offsets the fall in bank credit, thus dampening the policies’ effect on total credit.

Original languageEnglish
Pages (from-to)1209-1235
Number of pages27
JournalJournal of Money, Credit and Banking
Issue number5
Early online date27 May 2019
Publication statusPublished - Aug 2019


  • (shadow) banking
  • E58
  • financial cycle
  • financial supervision
  • G10
  • G18
  • G20
  • G58
  • macroprudential regulation


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