<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Macroprudential policy mainly aims to enhance financial stability and reduce the possibility of costly financial crises. However, to achieve this, macroprudential policy decisions may have some unintended side effects on economic growth. The paper provides an empirical framework for investigating potential side effects of macroprudential policy tools in developing countries. The results show that macroprudential policy decisions may lead to a decline in economic growth in developing countries, but the depth and efficiency of the financial sector may interact with macroprudential policy decisions to support economic environment stability. In the Arab region, the results differ compared to other developing countries, as the macroprudential policy interventions have a positive impact on economic growth, especially for the macroprudential tools that aim to enhance the resilience of the banking sector, while there is no effect of the cyclical macroprudential tools on economic growth.</p>
</abstract>

Macroprudential policy mainly aims to enhance financial stability and reduce the possibility of costly financial crises. However, to achieve this, macroprudential policy decisions may have some unintended side effects on economic growth. The paper provides an empirical framework for investigating potential side effects of macroprudential policy tools in developing countries. The results show that macroprudential policy decisions may lead to a decline in economic growth in developing countries, but the depth and efficiency of the financial sector may interact with macroprudential policy decisions to support economic environment stability. In the Arab region, the results differ compared to other developing countries, as the macroprudential policy interventions have a positive impact on economic growth, especially for the macroprudential tools that aim to enhance the resilience of the banking sector, while there is no effect of the cyclical macroprudential tools on economic growth.

The Side Effects of Macroprudential Policies on Economic Performance in the Arab Region

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

Macroprudential policy mainly aims to enhance financial stability and reduce the possibility of costly financial crises. However, to achieve this,...

The Side Effects of Macroprudential Policies on Economic Performance in the Arab Region

Published Online: Jun 07, 2024

Page range: 89 - 107

Received: Apr 11, 2023

Accepted: Jun 15, 2023

DOI: https://doi.org/10.2478/jcbtp-2024-0014

Keywords
Macroprudential Policy, Central Banks, Economic Growth, Arab Region

© 2024 Rami Obeid, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

The Side Effects of Macroprudential Policies on Economic Performance in the Arab Region

Published Online: Jun 07, 2024

Page range: 89 - 107

Received: Apr 11, 2023

Accepted: Jun 15, 2023

DOI: https://doi.org/10.2478/jcbtp-2024-0014

KeywordsMacroprudential Policy, Central Banks, Economic Growth, Arab Region

© 2024 Rami Obeid, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
Macroprudential Policy, Central Banks, Economic Growth, Arab Region