The effects of macroprudential policies in the Brazilian banking sector

Abstract

Purpose

This paper aims to investigate the effects of macroprudential policies in Brazil on the banking sector.

Design/methodology/approach

Autoregressive models with distributed lags (ADL) are estimated to verify whether such regulatory measures affected the volume of credit, the banking spread and the concentration index of the five largest Brazilian banks. In addition to the variables of interest, monthly macroeconomic data from 2011 to 2021 are considered.

Findings

Our results suggest that macroprudential policies are effective in reducing credit volume. More importantly, our findings highlight two possible adverse effects of these instruments. Firstly, macroprudential tightenings are associated with increases in bank spread. Secondly, tightening measures contribute to increasing bank market concentration.

Originality/value

These findings are useful for the scientific literature that investigates the regulation of the financial system by providing empirical evidence of the effects of Brazilian macroprudential measures on investors, policymakers and other economic agents whose well-being is associated with economic stability.

Citation

Moscareli, L.G., Tessmann, M.S., Beppler, L.S. and Ely, R.A. (2024), "The effects of macroprudential policies in the Brazilian banking sector", Journal of Financial Economic Policy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFEP-11-2023-0335