Financial Regulation Effect on Inequality in Selected EU Sountries

Abstract

This thesis investigates the impact of macroprudential policies (MAP) on income inequality in Dependent Market Economies (DME) within post-transition EU countries, specifically focusing on the Czech Republic, Hungary, Poland, Romania, and Slovakia. Utilizing data from the iMaaP index by the IMF, SWIID, and additional sources such as the World Bank and IMF, this study analyses the frequency and categories of MAP measures implemented from 1990 to 2021, with a primary focus on the period 2004-2021. The research employs a time series OLS regression analysis to explore the relationship between tightening and loosening of capital and liquidity-based measures (CLBM) and borrower-based measures (BBM) on income inequality. The findings indicate that tightening CLBM measures consistently reduce income inequality, while the effects of loosening CLBM and BBM measures are less conclusive due to data limitations. This study highlights the importance of context-specific policy design, integration with social policies, and enhanced data collection for effective macroprudential governance. The results contribute to a nuanced understanding of the role of MAPs in shaping economic equity in DME and provide practical policy recommendations for improving financial stability and reducing inequality.