Analysing the Spanish banking sector from a regulatory perspective – a critical assessment of the efficiency of macroprudential measures for financial stability developments

A response to the Global Financial Crisis was the introduction of the Basel III regulatory requirements. The newly adapted Basel accord should incorporate lessons learned such as the need for counteracting the procyclicality of the previous Basel II regulation and the missing liquidity and leverage standards. Spain, however, had already implemented a countercyclical macroprudential instrument as well as granular credit register, for monitoring unfavourable credit developments before this regulation and was still not able to mitigate the double-tip recession that started in 2008. Therefore, this thesis discusses the financial stability protection potential of macroprudential instruments like the ones implemented with Basel III and macroprudential statistic such as the new credit register AnaCredit. Spain has been taken as an empirical example for examining the instruments’ efficiency due to the pioneering steps towards macroprudential measures. The results show that Spain had already implemented very useful measures which definitely have the potential of contributing to financial soundness. The amendment to the efficiency of these measures is the prerequisite of continuous improvement and complementary policy actions. Otherwise excessive credit growth developments, which can initiate financial instability, cannot be detected or controlled sufficiently as it was the case in Spain. The limitation to this analysis is the need for further observation of the developments in the Euro system. This is important especially for the Liquidity and Leverage components of Basel III, as there have not been similar measures implemented in Spain. In the future it has to be monitored if the Basel III instruments and AnaCredit actually detect the vulnerabilities before a systemic collapse or whether the financial development of the countries remains similar to the Spanish development