Journal article
Do macroprudential policies affect bank efficiency? Evidence from emerging economies
Journal of international financial markets, institutions & money, v 77, 101529
Mar 2022
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
•We assess the impact of macroprudential policies on bank efficiency.•Bank efficiency increases with more stringent macroprudential policies.•Macroprudential policies with differed aims affect bank efficiency differently.•Macroprudential policies affect bank efficiency conditional on bank features.
This paper assesses the impact of macroprudential policies on the efficiency of banks. Using the data of more than 1,000 commercial banks in 36 emerging economies during the period of 2000–2016, we first estimate bank-level efficiency by using the stochastic frontier approach and then adopt the fixed effects estimator to examine the impact of macroprudential policies on bank efficiency. We present consistent evidence on following three main findings. First, bank efficiency increases significantly with more stringent macroprudential policies. Second, there are competing effects of the macroprudential instruments aimed to increase the banking sector’s resilience and those aimed to smooth the credit cycle. The latter is shown to have more favorable impact on bank efficiency. Third, conditional on bank characteristics, macroprudential policies exert distributional effects on bank efficiency--more conspicuously on banks with less capitalization and lower market power and more on domestic private banks than state-owned banks and foreign banks.
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Details
- Title
- Do macroprudential policies affect bank efficiency? Evidence from emerging economies
- Creators
- Minghua Chen - Southwestern University of Finance and EconomicsQiaoling Kang - Southwestern University of Finance and EconomicsJi Wu - Southwestern University of Finance and EconomicsBang Nam Jeon - Drexel University
- Publication Details
- Journal of international financial markets, institutions & money, v 77, 101529
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000772018900025
- Scopus ID
- 2-s2.0-85124883132
- Other Identifier
- 991019330814104721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics