This forward-looking Research Handbook provides a definitive overview of macroprudential policymaking. It sheds light on the analytical tools and conceptual frameworks that support contemporary financial stability regimes and examines how leading central banks deploy measures from bank capital requirements and housing-credit limits to stress testing.
Leading experts draw on lessons learnt from major financial crises including the 2007-2009 Global Financial Crisis, the 2020 Covid-19 dash for cash, and the 2023 Silicon Valley Bank crisis, to assess how, and under what conditions, macroprudential instruments succeed and fail. The Research Handbook explores the dynamic interactions between these tools and monetary policy, housing markets, credit cycles and emerging threats such as non-bank finance, crypto, cross-border capital flows and climate risk. Organised into seven thematic sections, the Research Handbook distils international cutting-edge research into practical insights and identifies priorities for further inquiry into how to avert, or better manage, future financial crises.
The Research Handbook of Macroprudential Policy is an excellent resource for scholars and researchers in banking regulation, economics and finance, business and management and public policy. It is also an accessible guide for practitioners, policymakers and regulators looking to make informed decisions on safeguarding financial systemic resilience.
Arvustused
Macroprudential policy is profoundly practical, borne out of the many financial crises in recent decades, but it is also a new field with rigorous modelling frameworks. This research volume gathers authors at the top of their game, shedding light on both. It is a must read for researchers and policymakers alike. -- Hyun Song Shin, Economic Adviser and Head of the Monetary and Economic Department, Bank for International Settlements Aikman and Gai's well-constructed volume will prove indispensable as a resource for research and thinking on the political economy and political science of regimes for financial stability. We know crises are very bad for economic prosperity and political legitimacy, but we still don't know how to incentivise independent authorities to act to make the system resilient without overreaching. This book helps frame an agenda that all but political revolutionaries should support. -- Paul Tucker, author of Unelected Power, and former central banker
Contents
Introduction 1
David Aikman and Prasanna Gai
PART I THE OBJECTIVES OF MACROPRUDENTIAL POLICY
1 In search of a macroprudential loss function 8
Richard Barwell
2 Making banking safe 27
Stephen G. Cecchetti and Kermit L.
Schoenholtz
PART II DEBT DYNAMICS AND FINANCIAL CRISES
3 Aggregate debt servicing and the limit on private credit 54
Mathias Drehmann, Mikael Juselius, and
Sarah Quincy
4 The causes and consequences of high household indebtedness: evidence from
Korea 81
Hwan-Koo Kang and Kyeongtae Lee
5 The role of debt in financial crises: lessons from the past 93
Pedro Duarte Neves
PART III EXPERIENCE WITH MACROPRUDENTIAL TOOLS
6 Has macroprudential policy been effective? How can we know? 113
Erlend W. Nier
7 Housing and macroprudential policy 131
John Muellbauer
8 The effects of mortgage debt limits: lessons and questions from the Irish
experience since 2015 178
Edward Gaffney, Niamh Hallissey, and
Fergal McCann
9 Macroprudential policy and capital flows 200
Margaret Davenport, Filipa Sá, and
Tomasz Wieladek
10 Distributional consequences of borrower-based macroprudential tools 220
Jose-Luis Peydró Francesc
Rodriguez-Tous, Jagdish Tripathy, and
Arzu Uluc
PART IV USEFUL MODELS
11 Outlook-at-risk 241
Nina Boyarchenko
12 Multiple equilibria? Dont panic! a hitchhikers guide to global games
260
Kartik Anand and Philipp J. König
13 Stress testing tools: where we stand and where to go? 295
Claudio Barbieri, Grzegorz Haaj, and Christoffer Kok
14 Towards a macroeconomic model of banking crises 318
Daisuke Ikeda and Hidehiko Matsumoto
15 Bank capital requirements and bank lending: from theory to empirics to
policy 343
Saleem Bahaj, Chiara Lattanzio, and Frederic Malherbe
PART V GOVERNANCE ARRANGEMENTS AND COORDINATION WITH OTHER MACROECONOMIC
POLICIES
16 Macroprudential governance: lessons from policies to mitigate housing
market risks 369
Ryan Banerjee and Philip Wooldridge
17 Interaction of macroprudential and monetary policies: practice ahead of
theory 384
Thibaut Duprey, Yaz Terajima, and Jing Yang
PART VI SYSTEMIC RISK OUTSIDE THE BANKING SYSTEM
18 Shadow banking 417
Nathaniel Butler Blondel and Guillaume Plantin
19 Macroprudential policy, monetary policy and non-bank financial
intermediation 438
Margherita Giuzio, Sujit Kapadia, Christoph Kaufmann, Manuela Storz, and
Christian Weistroffer
20 US life insurers and systemic risk 474
Nathan Foley-Fisher, Nathan Heinrich, and Stéphane Verani
PART VII FRONTIER ISSUES
21 Climate change, systemic risk, and macroprudential policy 499
Paul Hiebert
22 Climate risks in US housing and mortgage markets 513
Toàn Phan
23 Cryptocurrencies and decentralised finance: functions and financial
stability implications 521
Matteo Aquilina, Giulio Cornelli, Jon Frost, and Leonardo Gambacorta
Edited by David Aikman, Director, the National Institute of Economic and Social Research, UK and Prasanna Gai, Professor of Economics, University of Auckland, New Zealand
