US Bank Capital Regulation: History and Changes Since the Financial Crisis

Walter, John S.

doi:10.21144/eq1050101

Cited by 22 publications

(6 citation statements)

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“…Under the post-GFC ample reserve environment, leverage-constrained global banks have preferred reserve-draining intermediation over matched-book intermediation due to the stronger capital regulations that increase the cost of balance sheet expansions. The new Basel III framework and the Dodd-Frank Act changed the minimum capital requirement levels and introduced additional buffers for U.S. banking organizations (Walter (2019)). Of particular importance for U.S. GSIBs, the new requirements included a more stringent leverage ratio (enhanced supplementary leverage ratio or eSLR) and a GSIB surcharge applied on top of the other risked-based capital requirements.…”

Section: Why Reserve-draining Intermediation?mentioning

confidence: 99%

U.S. Banks and Global Liquidity

Correa

Liao

2020

SSRN Journal

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We characterize how U.S. global systemically important banks (GSIBs) supply shortterm dollar liquidity in repo and foreign exchange swap markets in the post-Global Financial Crisis regulatory environment and serve as the "lenders-of-second-to-lastresort". Using daily supervisory bank balance sheet information, we find that U.S. GSIBs modestly increase their dollar liquidity provision in response to dollar funding shortages, particularly at period-ends, when the U.S. Treasury General Account balance increases, and during the balance sheet taper of the Federal Reserve. The increase in the dollar liquidity provision is mainly financed by reducing excess reserve balances at the Federal Reserve. Intra-firm transfers between depository institutions and broker-dealer subsidiaries within the same bank holding company are crucial to this type of "reserve-draining" intermediation. Finally, we discuss factors that contributed to the repo spike in September 2019 and the subsequent response of U.S. GSIBs to recent policy interventions by the Federal Reserve.

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Section: Why Reserve-draining Intermediation?mentioning

confidence: 99%

U.S. Banks and Global Liquidity

Correa

Liao

2020

SSRN Journal

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“…This vault capital is generally not an earning asset for the bank and therefore plays an important role in cost of borrowings (deposit) of the banks. The main idea of regulatory capital requirements in the form of Basel capital accords came from the US savings and loan crisis of 1980 (Carlson et al, 2013), 7 when simple equity to assets ratio was not found enough by bank supervisors to discourage banks from taking unnecessary risks (Abou‐El‐Sood, 2017; Walter, 2019). The Basel capital accords resulted in a regulatory capital that seems to be procyclical because of the underestimation of risks during booms and overestimation of risks in recessions (Blundell‐Wignall et al, 2018; Gambacorta & Karmakar, 2016; Huizinga & Laeven, 2019; Varotto, 2011; Xu et al, 2015).…”

Section: Methodsmentioning

confidence: 99%

Cyclicality of capital adequacy ratios in heterogeneous environment: A nonlinear panel smooth transition regression explanation

et al. 2021

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Our study uses a new business cycle (BC) index and a nonlinear panel smooth transition regression model on quarterly data of 1538 bank holding companies of the United States to investigate response of capital adequacy ratios (CARs) to changes in economic activity. Our findings confirm the existence of nonlinear effects of BC on CARs. Although we use a nonlinear model and a new proxy of BC, our results about CARs are not only consistent with existing mainstream literature but also improve estimation and goodness of the estimation of CARs. The study outcome is useful for policymakers for CARs' standards adjustments during recessions.

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“…A bank that is unconstrained can become constrained because of an increase in capital requirements. Capital requirements increase substantially after the GFC (Walter, 2019).…”

Section: Regulation and Bank Liquid Asset Holdingsmentioning

confidence: 99%

Bank Liquid Assets, the Portfolio Motive, and Capital Requirements

Stulz¹,

Taboada²,

Dijk³

2022

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for comments. Stulz is at times retained by financial institutions or their attorneys as a consultant or as an expert. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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US Bank Capital Regulation: History and Changes Since the Financial Crisis

Cited by 22 publications

References 0 publications

U.S. Banks and Global Liquidity

U.S. Banks and Global Liquidity

Cyclicality of capital adequacy ratios in heterogeneous environment: A nonlinear panel smooth transition regression explanation

Bank Liquid Assets, the Portfolio Motive, and Capital Requirements

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