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Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements

Author/Editor: Roger, Scott | Vlcek, Jan
Authorized for Distribution: May 1, 2011
Electronic Access: Free Full Text (PDF file size is 1,364KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

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.
 
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Series: Working Paper No. 11/103
Subject(s): Bank regulations | Banking sector | Capital | Economic models | External shocks | Liquidity | Monetary policy
Author's keyword(s): Capital and liquidity requirements | financial frictions | macro-financial linkages.
 
English  
    Published:   May 1, 2011        
            Format:   Paper
    Stock No:   WPIEA2011103   Pages:   51
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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