Borrower- and lender-based macroprudential policies: What works best against bank systemic risk?

This paper investigates the complementarity between different macroprudential policies to contain bank systemic risk. We use a newly updated version of IMF survey on Global Macroprudential Policy Instruments (GMPI). By disentangling aggregate policy index, we assess borrower-targeted and lender-targeted instruments in mitigating risk arising from intra-financial system vulnerabilities. investigate effect boom-bust cycle such relationship by analyzing financial upturns downturns show effectiveness during calm period. also that their efficacy instability is quite heterogeneous may vary depending set tools implemented, as well bank’ size, TBTF, leverage, liquidity concentration. Our results bear critical implications for implementing optimal provide insights into trade-off vis-à-vis price stability.