Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216804 
Year of Publication: 
2017
Citation: 
[Journal:] Journal of Political Economy [ISSN:] 1537-534X [Volume:] 125 [Issue:] 6 [Publisher:] University of Chicago Press [Place:] Chicago, IL [Year:] 2017 [Pages:] 2126-2177
Publisher: 
University of Chicago Press, Chicago, IL
Abstract: 
To study the impact of macroprudential policy on credit supply cycles and real effects, we analyze dynamic provisioning. Introduced in Spain in 2000, revised four times, and tested in its countercyclicality during the crisis, it affected banks differentially. We find that dynamic provisioning smooths credit supply cycles and, in bad times, supports firm performance. A 1 percentage point increase in capital buffers extends credit to firms by 9 percentage points, increasing firm employment (6 percentage points) and survival (1 percentage point). Moreover, there are important compositional effects in credit supply related to risk and regulatory arbitrage by nonregulated and regulated but less affected banks.
Subjects: 
macroprudential policy
financial crises
credit
bank capital
systemic risk
JEL: 
E51
E58
E60
G01
G21
G28
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)
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