Macroprudencial regulation in Mexico: Evidence from structural changes on housing loans and prices.
Abstract
The use of macroprudential policies to mitigate credit risk has been used in emerging economies, and according to recent evidence, these policies could affect other financial variables such as the credit growth and housing prices. In March 2011 in México authorities mandated loan loss provisions for housing loans based on the loss expectations of mortgage loans instead of the recorded losses. And, between 2014 and 2015, there were modifications on the capital and liquidity requirements. The objective of this study is to examine whether macroprudential policy affected the housing credit growth and house price appreciation related to macroprudential changes applied to housing. Using the methodology of unit root test with structural break, we found macroprudential policies implemented had effects on the growth of mortgage credit and there is a house price appreciation that might be related to macroprudential policies analyzed.
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