Search results
This study investigates the link between capital regulation and bank risk-taking. Using a sample of over 1,800 banks in 135 countries, I find that the relationship between capital regulation and bank risk-taking (measured by z-score) is an inverse ‘U’ shape. That is, as capital ratios increase, a bank will take less risk initially, then ...
- Roshanthi Dias
- 2021
Jan 22, 2015 · Capital regulation acts as an external force in the determination of bank capital and risk levels. Changes in the regulatory framework can influence banks’ decisions. Starting from the debate of the prudential regulation after the financial crisis, this paper reviews the main empirical contributions on the role of capital regulation in the determination of banks’ capital ratios and risk ...
- Alessandra Tanda
- 2015
Jan 9, 2021 · In the present research, we explain the effect of capital ratios on bank risk-taking of large insured commercial banks in the USA, covering the extensive period ranging from 2002 to 2018. Our results indicate that the risk proxies LLR and NPL are following the moral hazard hypothesis, and RWA is consistent with regulatory theory.
- Faisal Abbas, Omar Masood, Shoaib Ali, Sohail Rizwan
- 2021
prudential regulation may have increased the importance of the risk-taking channel and that prevailing macroeconomic paradigms and associated models are not well suited to capturing it, thereby also reducing their effectiveness as guides to monetary policy.
- 270KB
- 45
Dec 1, 2012 · For value-maximising banks, capital requirements reduce banks’ risk-taking incentive. The analysis is based on a flat-rate capital rule. Rochet (1992) A static model: For utility-maximising banks, capital regulation can reduce banks’ risk taking, but only if the risk weights are properly chosen. Calem and Rob (1999)
- Claudio Borio, Haibin Zhu
- 2012
Oct 1, 2024 · The BRSS offers a comprehensive overview of the evolution in bank capital regulations and bank risk after the global financial crisis (Anginer et al., 2019). 1 We complement the analyses with bank-level data from around 13,800 banks for up to 126 jurisdictions to uncover evidence on how the quality of bank capital affects individual bank risk ...
People also ask
Does capital regulation reduce bank risk-taking?
Does capital regulation affect risk decisions?
Do capital ratios affect bank risk-taking?
How does capital regulation affect monetary policy?
Does regulatory capital quality affect bank risk?
How does capital regulation affect loan quality?
Aug 1, 2016 · The risk-taking channel refers to how changes in monetary policy rates affect either risk perceptions or risk tolerance (Borio and Zhu, 2012). According to this perspective, easy monetary conditions represent a standard element in boom-bust type business fluctuations, i.e., low interest rates may lead to financial imbalances through a reduction in banks' risk aversion, affecting the supply of ...
