Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements
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Summary:
This paper uses a DSGE model with banks and financial frictions in credit markets to assess the medium-term macroeconomic costs of increasing capital and liquidity requirements. The analysis indicates that the macroeconomic costs of such measures are sensitive to the length of the implementation period as well as to the adjustment strategy used by banks, and the scope for monetary policy to respond to the regulatory changes.
Series:
Working Paper No. 2011/103
Subject:
Bank credit Banking Capital adequacy requirements Central bank policy rate Financial institutions Financial regulation and supervision Financial services Liquidity requirements Loans Money
English
Publication Date:
May 1, 2011
ISBN/ISSN:
9781455260386/1018-5941
Stock No:
WPIEA2011103
Pages:
51
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