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The effectiveness of macroprudential policies in curbing operational risk exposures

Author

Listed:
  • Panagiotis Konstantinou

    (Athens University of Economics and Business)

  • Anastasios Rizos

    (Bank of Greece)

  • Artemis Stratopoulou

    (Centre of Planning and Economic Research)

Abstract
Banks’ focus nowadays shifts to non-financial risks, since credit and market risks are now well understood and under better control. We study whether macroprudential policy, designed to enhance financial system resilience, can mitigate or magnify losses stemming from such risks. To do so, we use a panel dataset on Eurozone countries between 2009-2018 and examine the dynamic path of operational risk exposures in response to tightening and loosening events of various macroprudential policies. Our results show that the tightening of specific measures, i.e., loan loss provisions, liquidity and loan to value, increases operational losses, whereas the loosening of measures, such as conservation buffers, loan loss provisions and debt service to income leads to a reduction in operational losses. Our results remain robust when we employ the inverse probability weighted estimator.

Suggested Citation

  • Panagiotis Konstantinou & Anastasios Rizos & Artemis Stratopoulou, 2025. "The effectiveness of macroprudential policies in curbing operational risk exposures," Working Papers 344, Bank of Greece.
    • Handle: RePEc:bog:wpaper:344
    DOI: 10.52903/wp2025344
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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