January 15, 2018

ECB published a working paper that analyzes macro-prudential regulation in the EU between 1995 and 2014. The paper introduces a new comprehensive data set on policies of a macro-prudential nature in the banking sectors of the 28 member states of the EU. It describes the design and structure of the new data set and presents analysis of the use of macro-prudential policy measures in the EU during the period in consideration.

The working paper reviews existing data collections of macro-prudential policy measures. It also describes the coverage of the new Macro prudential Policies Evaluation Database (MaPPED) data set and provides a clear definition of what is understood as a measure of a macro-prudential nature. It then offers information on the data collection process and presents basic descriptive statistics on the number of policy actions covered as well as several key attributes included in the data set. Next, the paper provides a first descriptive analysis of the use of macro-prudential measures in the EU between 1995 and 2014, along with a first descriptive assessment of the effectiveness of these policy measures in controlling credit growth. The paper concludes by proposing directions for future research using the new data. The annex to this paper offers additional descriptive statistics as well as a detailed codebook for users of the data set.

MaPPED offers a detailed overview of the life-cycle of policy instruments, which are either genuinely macro-prudential or are essentially micro-prudential, but likely to have a significant impact on the whole banking system. The paper uncovers common trends and notable country-specific differences in the implementation of policies with a macro-prudential character and helps to put the new post-Basel III approach of regulating financial systems into historical perspective. The paper notes that there has been a remarkable variation in the use of policies of a macro-prudential nature, both across EU countries and over time. Moreover, the analysis provides tentative evidence of an impact of capital buffers, lending restrictions, and caps on maturity mismatches on credit to the non-financial private sector in the EU as well as of the relative ineffectiveness of sectoral risk-weights in controlling credit growth.

 

Related Link: Working Paper

Keywords: Europe, EU, Banking, Macro-Prudential Policy, Financial Stability, Basel III, ECB

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