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Author
da Fonseca Nicolay Rodolfo Tomás (Catholic University of Petropolis - Petrópolis, Rio de Janeiro, Brazil), de Moraes Claudio Oliveira (Candido Mendes University, Rio de Janeiro, Brazil), Pires Tiberto Bruno (Central Bank of Brazil)
Title
The Effect of Central Bank Communication on the Capital Buffer of Banks: Evidence from an Emerging Economy
Source
Econometric Research in Finance, 2018, vol. 3, nr 1, s. 1-26, tab., bibliogr. 35 poz.
Keyword
Polityka pieniężna, Stabilność finansowa, Polityka gospodarcza, Banki, Polityka makroostrożnościowa
Monetary policy, Financial sustainability, Economic policy, Banks, Macroprudential policy
Note
JEL classifcation: E52, E58, G18
summ.
Country
Brazylia
Brazil
Abstract
The global financial crisis has revealed that the coordination between monetary policy and financial stability should be part of economic policy. This study examines the effects of monetary policy on the capital buffer (financial stability proxy) in the Brazilian economy and, in particular, how communication about both monetary policy and normative macroprudential policy affect the capital buffer maintained by banks. The study presents three main results: i) banks react strongly to monetary policy changes by increasing (reducing) the capital buffer in response to an increase (decrease) in the interest rate; ii) banks increase (decrease) the capital buffer when the central bank monetary policy communication signals an increase (decrease) in interest rates; and iii) banks use the capital buffer to accommodate the new measures of regulatory capital: the announcement of restrictive (liberalizing) capital measures reduces (increases) the capital buffer(original abstract)
Accessibility
The Library of Warsaw School of Economics
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Bibliography
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ISSN
2451-1935
2451-2370
Language
eng
URI / DOI
https://doi.org/10.33119/ERFIN.2018.3.1.1
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