Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269109 
Year of Publication: 
2022
Series/Report no.: 
ECB Working Paper No. 2702
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Macroprudential policies should strengthen the banking sector throughout the financial cycle. However, while bank credit growth is used to capture cyclical exuberance and calibrate buffer requirements, it depends on potentially heterogeneous dynamics on the borrower and lender sides. By decomposing credit growth into a common component and components capturing heterogeneity in supply and demand à la Amiti and Weinstein, 2018 applied on the euro area credit register ("AnaCredit"), we can inform the policy debates in two ways. Ex ante, we introduce a framework mapping the decomposition to different types of macroprudential instruments, specifically broad vs targeted measures. Ex post, we also show that the resulting decomposition can be used to assess the effectiveness of adopted measures on credit supply or demand. We find evidence that buffer releases and credit guarantees increased bank credit supply during the COVID-19 pandemic and interacted positively with banks' profitability.
Subjects: 
Capital requirements
Bu er Releases
European Economy
Bank-lending channel
Credit Dynamics
JEL: 
E58
E52
E44
G21
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-5287-3
Document Type: 
Working Paper

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