The Effects of Macroprudential Policies on Financial Stability in Developing Countries

The Effects of Macroprudential Policies on Financial Stability in Developing Countries

Sümeyra Gazel
Copyright: © 2019 |Pages: 23
ISBN13: 9781522572084|ISBN10: 1522572082|EISBN13: 9781522572091
DOI: 10.4018/978-1-5225-7208-4.ch005
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MLA

Gazel, Sümeyra. "The Effects of Macroprudential Policies on Financial Stability in Developing Countries." Maintaining Financial Stability in Times of Risk and Uncertainty, edited by Abhishek Behl and Sushma Nayak, IGI Global, 2019, pp. 92-114. https://doi.org/10.4018/978-1-5225-7208-4.ch005

APA

Gazel, S. (2019). The Effects of Macroprudential Policies on Financial Stability in Developing Countries. In A. Behl & S. Nayak (Eds.), Maintaining Financial Stability in Times of Risk and Uncertainty (pp. 92-114). IGI Global. https://doi.org/10.4018/978-1-5225-7208-4.ch005

Chicago

Gazel, Sümeyra. "The Effects of Macroprudential Policies on Financial Stability in Developing Countries." In Maintaining Financial Stability in Times of Risk and Uncertainty, edited by Abhishek Behl and Sushma Nayak, 92-114. Hershey, PA: IGI Global, 2019. https://doi.org/10.4018/978-1-5225-7208-4.ch005

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Abstract

In this chapter, the concept of financial instability is examined in terms of the policy instruments used by central banks. Although the policy instruments used in each country differ according to the country conditions, it is thought that the common factor among developing countries with a current account deficit problem is exchange rate volatility resulting from excessive credit growth and short-term capital movements. In this context, Argentina, Brazil, Chile, Colombia, Hungary, Indonesia, India, Mexico, Poland, South Africa, and Turkey are examined with regard to the effects of macroprudential policies on financial stability for the period between Q2 of 2006 and Q2 of 2017 by using the time-varying panel causality test developed by Dumitrescu and Hurlin. The results of the analysis indicate that excessive credit growth is a cause of the current account deficit. The same findings are also valid for interest rate. There is no obvious link between the exchange rate and the current account deficit.

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