Effectiveness of Macroprudential and Capital Flow Measures in Asia and the Pacific

Abstract

We assess the effectiveness of macroprudential policies in 12 Asia-Pacific economies, using comprehensive databases of capital flow measures (CFMs) and domestic macroprudential measures. We show that banking sector CFMs and bond market CFMs are effective in slowing down banking inflows and bond inflows, respectively. Our findings also provide some evidence of spillover effects from these types of CFM. Finally, we find that domestic macroprudential measures have insignificant effects on cross-border lending, bank credit and total credit.

Full publication: Cross-Border Financial Linkages: Challenges for Monetary Policy and Financial Stability

Keywords: banking inflow, bond inflow, domestic macroprudential measure, capital flow measure

JEL Classification: F34, G15, G28