Macroprudential policy, debt and social sustainability: Evidence from Spanish firms

Abstract

The need for a resilient financial system post-Great Recession led to the incorporation of macroprudential tools to the policy mix. While these policies aim to achieve financial stability, their potential impact on social sustainability deserves examination. This paper pursues two related objectives. First, it analyses the effects of macroprudential policy on firm-level credit growth in Spain. Second, it examines whether these credit effects are associated with changes in employment-based gender inequality within firms. The analysis uses panel regressions with data for more than 900,000 Spanish firms over the period 2010 to 2021, combined with a database on the loosening or tightening use of macroprudential measures in Spain during that period. We find that tightening macroprudential measures reduce firm-level debt growth and are associated with a narrowing of the gender gap in firms’ workforces, while loosening measures have the opposite effects. These results suggest that macroprudential policy may have indirect effects on social sustainability through its impact on corporate debt.