Macroprudential regulations and systemic risk: Does the one-size-fits-all approach work?

Rizwan, Muhammad Suhail

Abstract

This study empirically investigates whether systemic risk varies among countries with different income levels in response to macroprudential policy instruments (MPIs). The results suggest a negative association between overall MPIs and systemic risk using a sample of 68 countries covering the period between 2000 and 2017. However, not all instruments show intended stability benefits, especially for low and lower-middle-income economies. A comparative analysis reveals that upper-middle-income and high-income countries do receive stability benefits from MPIs. However, low and lower-middle-income economies show unintended instability costs in connection with MPIs, suggesting that a one-size-fits-all approach to macroprudential regulations is not beneficial. Low and lower-middle-income countries should carefully ascertain the choice, implementation, and monitoring of macroprudential policies.

Citation

Rizwan, M. S. (2021). Macroprudential regulations and systemic risk: Does the one-size-fits-all approach work?. Journal of International Financial Markets, Institutions and Money, 74, https://doi.org/10.1016/j.intfin.2021.101409

• Journal Article Type: Article
• Acceptance Date: Aug 14, 2021
• Online Publication Date: Aug 25, 2021
• Publication Date: Sep 1, 2021
• Deposit Date: Apr 25, 2025
• Journal: Journal of International Financial Markets, Institutions and Money
• Print ISSN: 1042-4431
• Electronic ISSN: 1873-0612
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 74
• DOI: https://doi.org/10.1016/j.intfin.2021.101409
• Public URL: https://durham-repository.worktribe.com/output/3804366