IDEAS home Printed from https://ideas.repec.org/a/rvs/bancar/11_5_3.html
   My bibliography  Save this article

The macroeconomic impact of Basel III on the Italian economy

Author

Listed:
  • Alberto Locarno

    (Banca d'Italia)

Abstract

This paper provides an assessment of the costs for Italy of complying with Basel III. The main findings are the following. For each percentage point increase in the capital ratio implemented over an eight-year horizon, the level of GDP would decline by 0.00-0.33% (0.03-0.39% if credit rationing is also accounted for), corresponding to a reduction of annual output growth in the transition period of 0.00-0.04 percentage points (0.00-0.05 if credit rationing is considered as well). Compliance with the new liquidity standards causes an additional reduction of GDP growth of 0.00-0.02 percentage points. If banks felt forced to bring forward the transition to the new capital rules to 2013, the fall in output would be larger and would take place be- forehand. Long-run costs of achieving the new capital standards are even lower, slightly less than 0.2%; those needed to comply with the target liquidity ratio are of a similar size.

Suggested Citation

  • Alberto Locarno, 2011. "The macroeconomic impact of Basel III on the Italian economy," Rivista Bancaria - Minerva Bancaria, Istituto di Cultura Bancaria Francesco Parrillo, issue 5-6, november.
    • Handle: RePEc:rvs:bancar:11_5_3
    as

    Download full text from publisher

    File URL: http://rivistabancaria.it/rb-rivista-bancaria/the-macroeconomic-impact-of-basel-iii-on-the-italian-economy
    Download Restriction: Full text for Rivista Bancaria subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fidrmuc, Jarko & Lind, Ronja, 2020. "Macroeconomic impact of Basel III: Evidence from a meta-analysis," Journal of Banking & Finance, Elsevier, vol. 112(C).
    2. Claudia Miani & Giulio Nicoletti & Alessandro Notarpietro & Massimiliano Pisani, 2012. "Banks� balance sheets and the macroeconomy in the Bank of Italy Quarterly Model," Questioni di Economia e Finanza (Occasional Papers) 135, Bank of Italy, Economic Research and International Relations Area.
    3. Nobili, Andrea & Zollino, Francesco, 2017. "A structural model for the housing and credit market in Italy," Journal of Housing Economics, Elsevier, vol. 36(C), pages 73-87.
    4. Sebastian Krug & Matthias Lengnick & Hans-Werner Wohltmann, 2014. "The impact of Basel III on financial (in)stability: an agent-based credit network approach," Quantitative Finance, Taylor & Francis Journals, vol. 15(12), pages 1917-1932, December.
    5. Zaroug Osman Bilal & Badreldin F. Salim, 2016. "Does Basil III Implementation Impact on Financial Performance? Evidence from Omani's Commercial Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 963-970.
    6. Eufrocinio M. Bernabe, Jr. & Jami’ah Jaffar, 2013. "Gauging the Macroeconomic Impact of Basel III on Malaysia," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp87.
    7. Martin Birn & Olivier de Bandt & Simon Firestone & Matías Gutiérrez Girault & Diana Hancock & Tord Krogh & Hitoshi Mio & Donald P. Morgan & Ajay Palvia & Valerio Scalone & Michael Straughan & Arzu Ulu, 2020. "The Costs and Benefits of Bank Capital—A Review of the Literature," JRFM, MDPI, vol. 13(4), pages 1-25, April.

    More about this item

    Keywords

    Basel III; Modigliani-Miller theorem; flow/stock costs of equity finance; capital/liquidity requirements;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rvs:bancar:11_5_3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefano Marzioni (email available below). General contact details of provider: http://www.rivistabancaria.it .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.