The Sequence of Bank Liberalisation: Financial Repression versus Capital Requirements in Russia
AbstractWe model how the reduction of required reserves and the introduction of capital rules affect bank risk-taking behaviour in a financially repressed environment. In the absence of capital rules, the reduction of required reserves unambiguously encourages gambling behaviour. The introduction of capital rules only succeeds in mitigating this effect if capital is not too costly and loan default rates are not too high. We use evidence from the Russian banking sector to illustrate the model. We conclude that a moderate amount of financial repression may be preferable to capital rules for the purpose of securing systemic stability if loan default rates are high and the cost of capital is considerable, which may be the case in many emerging banking markets. Comparative Economic Studies (2008) 50, 297–317;. doi:10.1057/ces.2008.7
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Comparative Economic Studies.
Volume (Year): 50 (2008)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.