Tighter loan-to-value ratios have stronger impact than a reduction
Other regulations might impact the effectiveness of LTV limits, the authors say
A higher limit on loan-to-value (LTV) ratios has a larger macroeconomic effect than a lower limit, according to research published by the Netherlands Bank (DNB).
In Heterogeneity and asymmetric macroeconomic effects of changes in loan-to-value limits, Jasper de Jong and Emmanuel de Veirman analyse the wider effects these macro-prudential measures had on the Dutch economy between 2011 and 2018.
“We find that changes in the LTV cap have non-linear effects in the sense that the effects become
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