Macroprudential Policies in Southeastern Europe

This paper presents a detailed account of the rich set of macroprudential measures taken in four Southeastern European countries-Bulgaria, Croatia, Romania, and Serbia-during their synchronized boom and bust cycles in 2003-12, and assesses their effectiveness. We find that only strong measures helpe...

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Bibliographic Details
Main Author: Dimova, Dilyana
Other Authors: Kongsamut, Piyabha, Vandenbussche, Jerome
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2016
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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651 4 |a Serbia, Republic of 
653 |a Monetary economics 
653 |a Finance 
653 |a Loans 
653 |a Depository Institutions 
653 |a Government and the Monetary System 
653 |a Reserve requirements 
653 |a Banks and Banking 
653 |a Money and Monetary Policy 
653 |a Monetary policy 
653 |a Industries: Financial Services 
653 |a Payment Systems 
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653 |a Standards 
653 |a Financial Institutions and Services: Government Policy and Regulation 
653 |a Monetary Policy 
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653 |a Currencies 
653 |a General Financial Markets: Government Policy and Regulation 
653 |a Regimes 
653 |a Mortgages 
653 |a Banking 
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653 |a Money 
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520 |a This paper presents a detailed account of the rich set of macroprudential measures taken in four Southeastern European countries-Bulgaria, Croatia, Romania, and Serbia-during their synchronized boom and bust cycles in 2003-12, and assesses their effectiveness. We find that only strong measures helped contain domestic credit growth, the share of foreigncurrency- denominated loans provided by the domestic banking sector, or the domestic banking sector's reliance on foreign borrowing during the boom years. We also find that circumvention via direct external borrowing often fully offset the effectiveness of these strict measures, and thatmeasures taken during the bust had no discernible impact. We conclude that (i) proper calibration of macroprudential measures is of the essence; (ii) only strong, broad-based macroprudential measures can contain credit booms; (iii) econometric studies of macroprudential policy effectiveness should focus on measures rather than on instruments (i.e. classes of measures) and in so doing allow for possible non-linear and state-contingent effects