Zuzana Gric (Czech National Bank and Masaryk University) - Distributional Effects of Borrower-Based Macroprudential Measures

BOFIT-seminaarit

BOFIT Seminar - Zuzana Gric (Czech National Bank and Masaryk University) - Distributional Effects of Borrower-Based Macroprudential Measures

Co-authors: Dominika Ehrenbergerová (Czech National Bank and Charles University in Prague) and Simona Malovaná (Czech National Bank and Charles University in Prague)

Abstract
Using household-level survey data on 22 European countries collected in four waves between 2010 and 2022, we document the distributional effects of borrower-based macroprudential measures (BBM). We find that the tightening of the BBM significantly reduces the availability of mortgages for lower-income households, leading to increased reliance on renting. Regulation works not only through the extensive margin by cutting off risky borrowers from the mortgage market, but also through the intensive margin by reducing the average loan amount of households with lower incomes. This reduction in risk has the positive side effect of lower borrowing costs, benefiting mainly households with above-average incomes. The easing of BBM, observed in several countries, does not yet fully reverse these effects.

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