Essays on macroprudential policies and corporate finance

Shi, Shuren (2026) Essays on macroprudential policies and corporate finance. PhD thesis, University of Glasgow.

Abstract

This thesis investigates the determinants and the implications of macroprudential policies – a novel policy that specifically designed to enhance financial stability after the global financial crisis. There are three chapters that complete this thesis. The following describes a brief abstract of all of them. The first chapter investigates bank and non-bank credit activities of SMEs and examines the causal effect of macroprudential policies (MaPs) on the credit constraints faced by SMEs. With respect to bank financing, MaPs can lead to a higher interest rate, a shorter maturity, and a reduced available size of loans. The effect of MaPs is primarily driven by bank lines of credit, whereas bank loans are mostly insensitive to the effect. Moreover, micro and small firms are more adversely affected than medium-sized firms, consistent with a flight-to-quality effect in bank lending. We also document inward spillovers: tighter foreign macroprudential policies ease domestic SME constraints. The study offers policy-relevant firm-level evidence on the trade-off between financial stability and SME financing conditions today. The second chapter presents new evidence on the impact of macroprudential policies on corporate investment using matched firm-bank data from the European Investment Bank Investment Survey (EIBIS), covering 29 countries over the period 2015-2022. We show that macroprudential tightening leads to a significant reduction in corporate investment, primarily driven by a contraction in bank credit supply. Firms respond by scaling back external financing, with the effects particularly pronounced among financially constrained firms and those borrowing from less-capitalized banks. Notably, the decline in investment is concentrated in tangible capital formation, while intangible investment remains largely unaffected. By disentangling the transmission channels and investment-specific responses to macroprudential policies, our findings underscore structural heterogeneity in credit constraints and asset pledgeability, thereby highlighting key trade-offs between financial stability and investment dynamics. The third chapter estimates the impact of geopolitical risk on macroprudential policy actions across a panel of 42 countries. Rising geopolitical risk leads to a statistically significant deactivation of macroprudential tightening, resulting in a less restrictive overall policy stance. A one-standard-deviation increase in GPR is associated with a reduction in tightening actions of 0.067, equivalent to approximately a 12.4% decrease relative to its standard deviation. The deactivation of macroprudential tightening is even more pronounced when geopolitical stress is preceded by a more restrictive monetary policy stance: a 50-basis-point increase in the policy rate more than doubles the baseline effect. We attribute this finding to an intertemporal policy trade-off: policy authorities prioritize short-term economic stability over medium-term systemic risk containment in response to geopolitical shocks.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Subjects: H Social Sciences > HG Finance
• Colleges/Schools: College of Social Sciences > Adam Smith Business School
• Supervisor's Name: Tsoukalas, Professor John, Baskaya, Professor Soner and Tsafos, Dr. Yannis
• Date of Award: 2026
• Depositing User: Theses Team
• Unique ID: glathesis:2026-86045
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 22 Jun 2026 14:21
• Last Modified: 22 Jun 2026 14:25
• Thesis DOI: 10.5525/gla.thesis.86045
• URI: https://theses.gla.ac.uk/id/eprint/86045