Page 272 - Special Topic Session (STS) - Volume 3

STS543 Muizz A. et al.
Table 1: Policies Implemented since 2010
Date Policy
4Q 2010 Introduction of maximum 70% loan-to-value (LTV) on 3rd residential
property loan and above
1Q 2011 Stricter credit card requirements such as introduction of
minimum eligibility criteria based on income and age
1Q 2011 Higher risk weights for capital adequacy requirements for residential
property loans with LTV ratio >90%
4Q 2011 Introduction of maximum 60% LTV on residential property loan for non-
individuals
1Q 2012 Implementation of Guidelines on Responsible Financing
- 2Q12: Implicit DSR limit of 60% for the low-income borrowers
3Q 2013 Introduction of maximum loan tenure:
- Personal financing: 10 years
- Residential property loans: 35 years
- Car loans: 9 years
3Q 2013 Implementation of Policy Document on Personal Financing that
prohibits offering of pre-approved personal financing products
4Q 2013 Prohibition of developers’ interest bearing scheme and related
financing by the financial institutions
4Q 2013 Implementation of Policy Document on Risk-Informed Pricing
4Q 2015 Introduction of minimum collective impairment provisions and
regulatory reserves of 1.2%
Note: These measures were also complimented by monetary and fiscal measures (e.g. Real
Property Gains Tax).

3. Data and Empirical Methodology
This study utilises data from the public credit registry (Central Credit
Registry Information System, CCRIS), administered by the Bank. CCRIS collates
information of all borrowers who obtained credit from financial institutions
regulated by the Bank and selected large NBFIs. Our data is a repeated cross-
section covering a sample of newly-approved personal financing and
residential property loan borrowers from 1Q 2009 to 4Q 2015.
The macroprudential policies that were implemented between 2010 and
2013 can affect potential borrowers in two ways.
First, the policies may have the effect of keeping some individuals out of
the credit market. For instance, some individuals may decide not to apply for
a loan at all after the implementation of these measures. For those who choose
to apply for a loan, they may be rejected by the financial institutions if they
4
are applying for a loan that is beyond their affordability level. To measure this
effect, we examine whether there are any significant changes in the

4 In many instances, those who were rejected do not have enough income or were unable to
pledge adequate equity.

261 | I S I W S C 2 0 1 9