Basel III and Bank-Lending: Evidence from the United States and Europe
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Summary:
Using data on commercial banks in the United States and Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank-lending following the 2008 financial crisis. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.
Series:
Working Paper No. 2017/245
Subject:
Asset and liability management Banking Basel III Capital adequacy requirements Credit Financial institutions Financial regulation and supervision Global financial crisis of 2008-2009 Liquidity management Loans Money
English
Publication Date:
November 15, 2017
ISBN/ISSN:
9781484328309/1018-5941
Stock No:
WPIEA2017245
Pages:
50
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