Measuring the restrictiveness of (macro)prudential policy: the case of bank capital regulation in Poland

The heterogeneity of the banking sector is a vital problem both in case conduct macroprudential policy, as well assessment its effectiveness. To address this issue, we construct new measure policy restrictiveness, bank’s free lending capacity ratio (the quotient bank can extend given capital surplus above requirement, and current volume loans). We describe advantages over measures used previous research. Finally, employing first difference GMM method on (dynamic) panel data series, explain drivers changes growth stock-listed banks Poland between 2010 2020. show that displays most convincing results among examined variables, pointing at usefulness explaining evaluating impact prudential regulation activity, understanding potential issues transmission monetary via sector, resulting from heterogeneity. draw practical policy-related conclusions, regards measurement restrictiveness.