scholarly journals A Macroeconomic Model With Financially Constrained Producers and Intermediaries

Econometrica ◽  
2021 ◽  
Vol 89 (3) ◽  
pp. 1361-1418
Author(s):  
Vadim Elenev ◽  
Tim Landvoigt ◽  
Stijn Van Nieuwerburgh
Keyword(s):  
Financial Crises ◽  
Capital Requirements ◽  
Financial Fragility ◽  
Financial Intermediaries ◽  
Capital Regulation ◽  
Sharp Change ◽  
Bank Capital ◽  
Financial Firms ◽  
Bank Capital Regulation

How much capital should financial intermediaries hold? We propose a general equilibrium model with a financial sector that makes risky long‐term loans to firms, funded by deposits from savers. Government guarantees create a role for bank capital regulation. The model captures the sharp and persistent drop in macro‐economic aggregates and credit provision as well as the sharp change in credit spreads observed during financial crises. Policies requiring intermediaries to hold more capital reduce financial fragility, reduce the size of the financial and non‐financial sectors, and lower intermediary profits. They redistribute wealth from savers to the owners of banks and non‐financial firms. Pre‐crisis capital requirements are close to optimal. Counter‐cyclical capital requirements increase welfare.

scholarly journals Evolución del proceso de regulación bancaria hasta Basilea-2 : origen, características y posibles efectos

2006 ◽  
pp. 23
Author(s):  
Cristina Gutierrez López ◽  
José Miguel Fernández Fernández
Keyword(s):  
Financial Innovation ◽  
Market Discipline ◽  
Financial Intermediaries ◽  
Capital Regulation ◽  
Bank Capital ◽  
Basel Accords ◽  
Bank Capital Regulation ◽  
New Basel Capital Accord ◽  
El Sistema ◽  
Financial Regulatory

El sistema finaciero se prepara para afrontar los retos derivados del Nuevo Acuerdo de Capitales aprobado en 2004, que viene a culminar un proceso de regulación financiera definido por la exigencia de capital como expresión de la solvencia. Esta evolución ha dado respuesta a la actividad de los intermediarios financieros, los cambios debidos a la globalización e innovación financiera, y los nuevos riesgos que han surgido en consecuencia. Además, se incorpora la supervisión a través del regulador y de la disciplina de mercado. El artículo resume las características de la regulación de capital bancario, hasta llegar al capital ajustado al riesgo que caracteriza los Acuerdos elaborados desde Basilea, para detallar después los contenidos del Nuevo Acuerdo, sus fortalezas y debilidades, así como su posibles efectos.<br /><br />The financial system is ready to face the challenges derived from the New Basel Capital Accord issued in 2004, which reflects the financial regulatory process characterized by the need of maintaining capital as expression of solvency. This evolution has responded to financial intermediaries activity, changes due to globalization and financial innovation, and the new risks which have came across. Additionally, it includes the supervison aspect through regulators and market discipline. This paper summarizes the characteristics of bank capital regulation, in order to explain risk-based-capital in the Basel Accords, putting forward the New Accord content, as well as its strengths, weaknesses, and possible effects.

Part I The Elements of Bank Financial Supervision, 2 Why Are Banks Supervised?

2018 ◽  
Author(s):  
Gleeson Simon
Keyword(s):  
Capital Requirements ◽  
Financial Supervision ◽  
Capital Regulation ◽  
Bank Capital ◽  
Banking Supervision ◽  
Risk Capital ◽  
The Public ◽  
Bank Capital Regulation ◽  
Bank Risks ◽  
Macroeconomic Environment

This chapter begins by setting out the Core Principles for Effective Banking Supervision produced by the Basel Committee in September 1997, reissued in a revised version in October 2006, and further revised in the light of the crisis in 2012. The 2012 revision of these principles focused on four major areas: corporate governance within banks; an obligation on supervisors to ensure that banks are appropriately prepared for resolution; an obligation for supervisors to assess bank risks in the context of the macroeconomic environment; and the idea that supervisors should have higher expectations of banks which are globally systemically significant than for other banks. The discussions then turn to capital regulation, constraints on bank capital regulation, quantum of bank capital requirements, whether the banking crisis proves that risk capital-based regulation failed, market crisis and regulation, and protecting the public from the consequences of bank failure.

scholarly journals The Rise of Shadow Banking: Evidence from Capital Regulation

2020 ◽  
Author(s):  
Rustom M Irani ◽  
Rajkamal Iyer ◽  
Ralf R Meisenzahl ◽  
José-Luis Peydró
Keyword(s):  
Fixed Effects ◽  
Price Volatility ◽  
Capital Requirements ◽  
Capital Regulation ◽  
Shadow Banking ◽  
Bank Capital ◽  
Shadow Banks ◽  
Bank Capital Regulation ◽  
Corporate Loan ◽  
The U.S

Abstract We investigate the connections between bank capital regulation and the prevalence of lightly regulated nonbanks (shadow banks) in the U.S. corporate loan market. For identification, we exploit a supervisory credit register of syndicated loans, loan-time fixed effects, and shocks to capital requirements arising from surprise features of the U.S. implementation of Basel III. We find that less-capitalized banks reduce loan retention, particularly among loans with higher capital requirements and at times when capital is scarce, and nonbanks step in. This reallocation is associated with important adverse effects during the 2008 crisis: loans funded by nonbanks with fragile liabilities are less likely to be rolled over and experience greater price volatility.

Regulating bank leverage

2018 ◽  
Vol 10 (2) ◽  
pp. 264-274 ◽  
Author(s):  
Alexander Bleck
Keyword(s):  
Design Methodology ◽  
Bank Regulation ◽  
Capital Requirements ◽  
Capital Regulation ◽  
Bank Capital ◽  
Content Type ◽  
Leverage Ratio ◽  
Risk Sensitive ◽  
Bank Capital Regulation ◽  
Ratio Rule

Purpose This paper aims to study the design of bank capital regulation and points out a conceptual downside of risk-sensitive regulation. The author argues that when a bank is better informed about its risk than the regulator, designing regulation is subject to the Lucas critique. The second-best regulation could be risk-insensitive, which provides an explanation for the leverage ratio as a backstop to risk-based capital requirements. This paper offers empirical predictions and implications for policy. Design/methodology/approach The argument in the paper is based on analytical results from mechanism design. Findings Optimal bank regulation could be risk-insensitive, as is observed in practice in the form of the leverage ratio rule. Originality/value Counter to conventional wisdom, the paper argues and provides a new explanation for why bank regulation should not be sensitive to the risk of the bank. The paper then offers empirical predictions and implications for policy.

Macroeconomic Cost Analysis of Enhanced Bank Capital Regulation

2018 ◽  
Vol 20 (4) ◽  
pp. 31-54
Author(s):  
Hyekyung Cha
Keyword(s):  
Cost Analysis ◽  
Capital Regulation ◽  
Bank Capital ◽  
Bank Capital Regulation

The nexus between loan portfolio size and volatility: Does bank capital regulation matter?

2021 ◽  
Vol 127 ◽  
pp. 106122
Author(s):  
Franziska Bremus ◽  
Melina Ludolph
Keyword(s):  
Capital Regulation ◽  
Bank Capital ◽  
Loan Portfolio ◽  
Bank Capital Regulation ◽  
Portfolio Size
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