The cyclical effects of the Basel II capital requirements

Autor:	Frank Heid
Rok vydání:	2007
Předmět:	Finance Economics and Econometrics business.industry Economic capital Risk-adjusted return on capital Monetary economics Basel II Capital adequacy ratio Financial capital Cost of capital Risk-weighted asset Capital requirement Economics business
Zdroj:	Journal of Banking & Finance. 31:3885-3900
ISSN:	0378-4266
DOI:	10.1016/j.jbankfin.2007.03.004
Popis:	Capital requirements play a key role in the supervision and regulation of banks. The Basel Committee on Banking Supervision is in the process of changing the current framework by introducing risk sensitive capital charges. Some fear that this will unduly increase the volatility of regulatory capital. Furthermore, by limiting the banks’ ability to lend, capital requirements may exacerbate an economic downturn. The paper examines the problem of capital-induced lending cycles and their pro-cyclical effect on the macroeconomy in greater detail. It finds that the capital buffer that banks hold on top of the required minimum capital plays a crucial role in mitigating the impact of the volatility of capital requirements.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::8f8e77fd759c845fd4649514030e36d5 https://doi.org/10.1016/j.jbankfin.2007.03.004 Zobrazit plný text záznamu Full Text from ScienceDirect