Working Paper: NBER ID: w17780
Authors: Joonho Hahm; Frederic S. Mishkin; Hyun Song Shin; Kwanho Shin
Abstract: This paper examines macroprudential policies in open emerging economies. It discusses how the recent financial crisis has provided a rationale for macroprudential policies to help manage the economy and the need for policymakers to monitor the financial cycle and systemic risks. It also discusses one particularly promising measure of the state of the financial cycle, the growth of non-core liabilities of the financial sector, and evaluates macroprudential policy frameworks. The paper uses Korea as an example and conducts an empirical evaluation of non-core liabilities of Korean banks as a measure of the financial cycle.
Keywords: macroprudential policies; emerging economies; financial cycle; systemic risks; noncore liabilities
JEL Codes: E44; E52; E58; G28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| macroprudential policies (E60) | financial stability (G28) |
| growth of noncore liabilities (G39) | financial cycle (G21) |
| financial crisis (G01) | reevaluation of monetary policy vs financial stability policy (E63) |
| excessive growth in noncore liabilities (G32) | financial instability (F65) |
| rapid credit growth (F65) | shift towards noncore liabilities (G19) |