## Assessing the Cost of Financial Regulation

_IMF Working Papers, September 26, 2012_

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## Bibliographic details
- Authors: Douglas Elliott, Andre O Santos
- Published: September 26, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475510836.001

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### Overview
- The study assesses the overall impact on credit of financial regulatory reforms in Europe, Japan, and the United States.
- Long-term cost estimates are provided for:
  - Basel III capital and liquidity requirements
  - Derivatives reforms
  - Higher taxes and fees

### Major findings
- Overall, average lending rates in the base case would rise by:
  - 18 bps in Europe
  - 8 bps in Japan
  - 28 bps in the United States
- Cost estimates are lower than those of the IIF due to:
  - Inclusion of expense cuts
  - Reductions in the returns required by investors

### Comparisons with other analyses
- Results are similar to:
  - The official BIS assessments of Basel III
  - An OECD analysis
- Results are markedly lower than those of the IIF.

### Policy implications and interpretation
- When evaluating the cost of regulatory reforms, it is important to account for:
  - Banks’ potential expense reductions
  - Changes in investor required returns
- Comparing multiple assessment approaches (BIS, OECD, IIF) highlights sensitivity of cost estimates to modeling assumptions about cost offsets and investor behavior.

*Source: Assessing the Cost of Financial Regulation, Douglas Elliott and Andre O Santos, September 26, 2012.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/assessing-the-cost-of-financial-regulation-40021_