The paper examines the effectiveness of macroprudential policy in Indonesia and policy reactions to economic developments. Using the structural vector autoregression and data on the regulatory LTV ratio, we investigate the policy effectiveness in controlling credit growth and real property...

Countercyclical capital buffer came in 2009 after Basel Committee proposed it through Basel III regulation to build banking resilience and tame the systemic risk due to excessive growth in the credit cycle. Basel committee proposed the credit to GDP gap or credit gap as the indicator of when...