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What Determines Institutional Arrangements for Macroprudential Policy?

Author

Listed:
  • Eri Egawa

    (Financial Infrastructure Studies Division, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: eri. egawa@boj.or.jp))

  • Akira Otani

    (Head of Economic and Financial Studies Division, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: akira. ootani@boj.or.jp))

  • Toshiyuki Sakiyama

    (Associate Director, Economic and Financial Studies Division, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: toshiyuki.sakiyama@boj.or.jp))

Abstract
We use information on institutional arrangements for macroprudential policy in 66 countries to examine the recent developments in and characteristics on institutional arrangements for macroprudential policy. Then we conduct empirical analyses on drivers behind the choice of institutional arrangements, especially the roles of a central bank and a government. We show that many countries have recently developed their institutional arrangements with respect to the set-up of a mandate for macroprudential policy and a multi-agency communication/coordination framework. In addition, the current arrangements can be largely divided into two types: centralization in the central bank, where the central bank or a committee of the central bank is the sole owner of the macroprudential mandate; and coordination by the government, where the government coordinates views or policies among multiple agencies with the macroprudential mandate as the sole chairperson of the financial stability committee. Our empirical analyses suggest that wide-ranging features including economic and financial characteristics, the exchange rate regime, and the degree of democracy influence the differences in the roles the central bank and the government play in macroprudential policy in each country.

Suggested Citation

  • Eri Egawa & Akira Otani & Toshiyuki Sakiyama, 2015. "What Determines Institutional Arrangements for Macroprudential Policy?," IMES Discussion Paper Series 15-E-03, Institute for Monetary and Economic Studies, Bank of Japan.
    • Handle: RePEc:ime:imedps:15-e-03
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    File URL: http://www.imes.boj.or.jp/research/papers/english/15-E-03.pdf
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    References listed on IDEAS

    as
    1. Berger, Helge & Nitsch, Volker & Lybek, Tonny, 2008. "Central bank boards around the world: Why does membership size differ?," European Journal of Political Economy, Elsevier, vol. 24(4), pages 817-832, December.
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    3. Andrew K. Rose, 2006. "Size Really Doesn't Matter: In Search of a National Scale Effect," NBER Working Papers 12191, National Bureau of Economic Research, Inc.
    4. Serge Jeanneau, 2014. "Financial stability objectives and arrangements - what's new?," BIS Papers chapters, in: Bank for International Settlements (ed.), The role of central banks in macroeconomic and financial stability, volume 76, pages 47-58, Bank for International Settlements.
    5. Rose, Andrew K., 2006. "Size really doesn't matter: In search of a national scale effect," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 482-507, December.
    6. International Monetary Fund, 2011. "Macroprudential Policy: What Instruments and How to Use them? Lessons From Country Experiences," IMF Working Papers 2011/238, International Monetary Fund.
    7. Erlend Nier & Mr. Luis Ignacio Jácome & Jacek Osinski & Pamela Madrid, 2011. "Institutional Models for Macroprudential Policy," IMF Staff Discussion Notes 2011/018, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Zulkhibri, Muhamed & Naiya, Ismaeel, 2016. "Assessment of Macroprudential Policy in a Dual Banking Sector," Working Papers 2016-2, The Islamic Research and Teaching Institute (IRTI).

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    More about this item

    Keywords

    Macroprudential policy; Ordered probit analyses; Institutional arrangements; Financial stability committee;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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