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The Macroeconomic Consequences of Bank Capital Requirements


  • Pablo Garcia


In the light of the recent crisis, there is now considerable concern about financial cycles and their implications for business fluctuations. Macroprudential policy has thus become part of the policy paradigm. In this work, a model of business cycles is developed which analyses the macroeconomic consequences of a minimum bank capital standard. Numerical examples suggest that capital regulation can be useful in strengthening the resilience of the banking sector, and hence reduce macro-financial volatility.

Suggested Citation

  • Pablo Garcia, 2019. "The Macroeconomic Consequences of Bank Capital Requirements," Annals of Economics and Statistics, GENES, issue 135, pages 157-187.
  • Handle: RePEc:adr:anecst:y:2019:i:135:p:157-187
    DOI: 10.15609/annaeconstat2009.135.0157

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    Cited by:

    1. Gabriel A. Ogunmola & Fengsheng Chien & Ka Yin Chau & Li Li, 2022. "The Influence of Capital Requirement of Basel III Adoption on Banks’ Operating Efficiency: Evidence from U.S. Banks," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(2), pages 5-26.

    More about this item


    Capital Adequacy Ratio; Financial Frictions; Occasionally Binding Constraints; Macro-Financial Linkages.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises


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