Loan-to-value ratios effective macroprudential tool: HKMA paper
Loan-to-value ratios are an effective policy tool in reducing systemic risk, a Hong Kong Monetary Authority paper, published on February 17, says.
Eric Wong, Tom Fong, Ka-fai Li and Henry Choi, the paper's authors, use panel data from 13 economies to assess the effectiveness and drawbacks of maximum loan-to-value ratios as a macroprudential tool.
Wong, Fong, Li and Choi find evidence that loan-to-value ratios are an effective tool in reducing systemic risk stemming from the boom-and-bust cycle
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