Basel III and Bank-Lending: Evidence from the United States and Europe

Author/Editor:

Sami Ben Naceur ; Caroline Roulet

Publication Date:

November 15, 2017

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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. 17/245

Subject:

English

Publication Date:

November 15, 2017

ISBN/ISSN:

9781484328309/1018-5941

Stock No:

WPIEA2017245

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

50

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