Macroeconomic Impact of Basel III

Abstract

The estimated medium-term impact of Basel III implementation on GDP growth is in the range of -0.05 to -0.15 percentage point per annum. Economic output is mainly affected by an increase in bank lending spreads as banks pass a rise in bank funding costs, due to higher capital requirements, to their customers. To meet the capital requirements effective in 2015 (4.5% for the common equity ratio, 6% for the Tier 1 capital ratio), banks are estimated to increase their lending spreads on average by about 15 basis points. The capital requirements effective as of 2019 (7% for the common equity ratio, 8.5% for the Tier 1 capital ratio) could increase bank lending spreads by about 50 basis points. The estimated effects on GDP growth assume no active response from monetary policy. To the extent that monetary policy will no longer be constrained by the zero lower bound, the Basel III impact on economic output could be offset by a reduction (or delayed increase) in monetary policy rates by about 30 to 80 basis points. Impact macro-économique de Bâle III L'impact estimé à moyen terme de la mise en conformité avec les règles de Bâle III sur la croissance du PIB est de l'ordre de -0,05 à -0,15 point de pourcentage par an. L’effet sur l’activité économique provient principalement de ce que les banques augmentent leurs marges de crédit afin de compenser la hausse de leurs coûts de financement provoquée par le durcissement des exigences de capital. Pour répondre aux exigences de fonds propres en 2015 (4,5% pour le ratio d'actions ordinaires, 6% pour le ratio de fonds propres de base), les banques devraient augmenter leurs marges de crédit d'environ 15 points de base en moyenne. Les exigences de capital en vigueur à compter de 2019 (7% pour le ratio d'actions ordinaires, 8,5% pour le ratio de fonds propres de base) pourraient augmenter les marges de crédit d’environ 50 points de base. Les effets estimés sur la croissance du PIB n’incorporent aucune réponse de la politique monétaire. Pour autant que la politique monétaire ne se heurte plus au plancher zéro des taux nominaux, l'impact de Bâle III sur la production économique pourrait être compensé par une réduction (ou un retard avant l’augmentation) des taux de la politique monétaire d'environ 30 à 80 points de base.monetary policy, bank, financial intermediaries, bank regulation, bank lending, interest rates, Basel accord, Basel III, bank capital requirements, politique monétaire, banque, taux d'intérêt, Réglementation des fonds propres bancaires, Accord de Bâle, Bâle III, crédit bancaire, réglementation bancaire, intermédiaires financiers

The Impact Of Basel III On Italian Banks Loan Rates: An Accounting-Based Approach

“…Those values suggest that effective actions towards the containment of operating costs may have a significant impact on a bank's annual earnings. Indeed, by applying equations (14) and (15) Of course, Italian banks could also adjust to higher capital requirements through a combined strategy involving both income and cost drivers. From this point of view, the new regulatory framework might encourage financial institutions to explore new operative solutions in order to improve efficiency and profitability standards.…”

Conference proceedings

“…These indicators provided for banks in the near future converts to bank requirements that will impact European bank investment policy. Slovik, P. and B. Cournède (2011) offered the approach of quantifying the impact of Basel III capital requirements on bank capital levels and bank lending spreads that can be used for evaluation of financial sector impact to national economy and transport sector.…”

Access of SMEs With Growth Potential to the Capital Markets

“…13 A recent study conducted by OECD economists estimates that the application of the new capital requirements in the scheduled time frame will lead to a fall in the GDP annual rate of change of between 0.05 and 0.15 percentage points for OECD member countries for the five years following its application (Slovik and Cournède, 2011). This estimate represents an upward revision of the estimate made in 2010 by the Macroeconomic Assessment Group, jointly set up by the Financial Stability Board and the Basel Committee on Banking Supervision, which put the annual decline in GDP for this reason between 0.03 and 0.05 percentage points (Macroeconomic Assessment Group, 2010).…”