<scp>B</scp>asel <scp>III</scp>: Long‐term Impact on Economic Performance and Fluctuations

Angelini, Paolo; Clerc, Laurent; Cúrdia, Vasco; Gambacorta, Leonardo; Gerali, Andrea; Locarno, Alberto; Motto, Roberto; Roeger, Werner; Heuvel, Skander Van den; Vlček, Jan

doi:10.1111/manc.12056

Cited by 66 publications

(24 citation statements)

References 38 publications

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“…Although the capital regulation is likely to reduce the probability of the occurrence of future banking crises and arguably has been justified to avoid the forestalled losses (in terms of the level of GDP) caused by the financial crises [1][2][3], the regulation is not free of criticisms. The impact of capital regulation on the cost of bank credit and bank profitability is under severe debate.…”

Section: Introductionmentioning

confidence: 99%

Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh

Zheng

Rahman

Begum

et al. 2017

JRFM

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Abstract:In response to the recent global financial crisis, the regulatory authorities in many countries have imposed stringent capital requirements in the form of the BASEL III Accord to ensure financial stability. On the other hand, bankers have criticized new regulation on the ground that it would enhance the cost of funds for bank borrowers and deteriorate the bank profitability. In this study, we examine the impact of capital requirements on the cost of financial intermediation and bank profitability using a panel dataset of 32 Bangladeshi banks over the period from 2000 to 2015. By employing a dynamic panel generalized method of moments (GMM) estimator, we find robust evidence that higher bank regulatory capital ratios reduce the cost of financial intermediation and increase bank profitability. The results hold when we use equity to total assets ratio as an alternative measure of bank capital. We also observe that switching from BASEL I to BASEL II has no measurable impact on the cost of financial intermediation and bank profitability in Bangladesh. In the empirical analysis, we further observe that higher bank management and cost efficiencies are associated with the lower cost of financial intermediation and higher bank profitability. These results have important implications for bank regulators, academicians, and bankers.

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Section: Introductionmentioning

confidence: 99%

Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh

Zheng

Rahman

Begum

et al. 2017

JRFM

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“…The concept behind a CCB is that the capital adequacy ratio is adjusted for a measure of the financial cycle, which affects the lending behaviour of banks throughout the credit cycle and thus also dampens output volatility (Angelini et al, 2015). I follow the Basel III regulation and set the target leverage ratio, ⌫ t , in (14) to be time-varying and follow a countercyclical rule that depends on the credit-to-GDP ratio…”

Section: Monetary and Macroprudential Policies: A Welfare Analysismentioning

confidence: 99%

Asymmetric Macro-Financial Spillovers

Bluwstein

2017

SSRN Journal

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The 2008 financial crisis has shown that financial busts can influence the real economy. However, there is less evidence to suggest that the same holds for financial booms. Using a Markov-Switching vector autoregressive model and euro area data, I show that financial booms tend to be less procyclical than financial busts. To identify the sources of asymmetry, I estimate a non-linear DSGE model with a heterogeneous banking sector and an occasionally binding borrowing constraint. The model matches the key features of the data and shows that the borrowers' balance sheet channel accounts for the asymmetry in the macro-financial linkages. The muted macro-financial transmission during financial booms can be exploited for macroprudential policies. By comparing capital buffer rules with monetary policy 'leaningagainst-the-wind' rules, I find that countercyclical capital buffers improve welfare.

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“…According to Weigand (2016, p. 75), "U.S. banks continue to exhibit a more robust post-crisis recovery, while Japanese and European banks continue to experience crisis-level conditions". Angelini et al (2015, p. 217) studied long-term impact of Basel III Capital and Liquidity requirements and proved that economic costs of the new regulatory standards for bank capital and liquidity are considerably below existing estimates of the benefits that the reform should have by reducing the probability of banking crises.…”

Section: Literature Reviewmentioning

confidence: 99%

Integration of Ukraine into the European banking system: cleaning, rebooting and Basel III

Ramskyi

Loiko

Sobolieva-Tereshchenko³

et al. 2017

Banks and Bank Systems

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The urgency of the issue is related to changes in the Ukrainian banks’ business environment, taking into account the impact of domestic and global financial instability and the implementation of the regulatory framework for banking regulation of the National Bank of Ukraine in accordance with the Basel Committee on Banking Supervision recommendations. The main goal of this research is to analyze the degree of implementation and compliance with the Basel III regulations in Ukrainian banking system. To carry out the research, regulatory and legislative documents of the National Bank of Ukraine, the Basel Accords, statistic data of the Ukrainian banks and the National Bank of Ukraine were used. For this purpose, the analysis of main indicators of Ukrainian banks’ financial stability within the period of 2014–2017 is made. Thus, post-crisis regulatory changes have aimed at restoring bank stability. The results seem to suggest that bank regulatory changes may be repressive, for instance, cleaning and optimization of the banking system as an effective tool for anticrisis management. As a result, it was concluded that banks with foreign capital are the most stable in the banking system of Ukraine in comparison with domestic banks.

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Basel III: Long‐term Impact on Economic Performance and Fluctuations

Cited by 66 publications

References 38 publications

Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh

Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh

Asymmetric Macro-Financial Spillovers

Integration of Ukraine into the European banking system: cleaning, rebooting and Basel III

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