Analysis demonstrates that macro-prudential policies effectively reduce systemic risk in banks across countries, suggesting tailored approaches are necessary.
Key Points
This analysis aims to evaluate the effectiveness of macro-prudential policies on bank systemic risk across 63 countries from 2001 to 2017.
Data from 63 countries analyzed from 2001 to 2017.
Evaluated the impact of macro-prudential policies on systemic risk at the country and bank levels.
Used instrumental variables to address potential confounding factors.
Macro-prudential policies significantly reduce systemic risk at the country level.
Effectiveness varies, being stronger in advanced economies, concentrated banking sectors, and with lax micro-prudential regulations.
Larger banks show a greater reduction in systemic risk from these policies, indicating size impacts policy effectiveness.