IDEAS home Printed from https://ideas.repec.org/a/bfr/fisrev/20151906.html
   My bibliography  Save this article

Supporting sustainable growth: the role of safe and stable banking systems

Author

Listed:
  • Ingves, S.

Abstract

Banks play a key role in financial intermediation, facilitating efficient capital allocation and maturity transformation. However, this can lead to excessive risk-taking, which, if not appropriately accounted for, can increase vulnerability to financial shocks. As we have witnessed in recent years, banking crises can have a severe and persistent negative effect on financial system stability and economic growth. Moreover, these negative impacts are indiscriminate, affecting a wide variety of sectors, the labour market and even spreading distress across borders. Empirical analyses show that financial system regulation, including the new Basel III framework, helps ensure greater financial system stability, by reducing the probability of financial crises. While there may be costs in the short-term, these are borne by those taking the risks and, importantly, outweighed by the benefits to society as a whole. In this way, banking system regulation, and the Basel III framework in particular, plays a significant role in supporting strong and durable growth.

Suggested Citation

  • Ingves, S., 2015. "Supporting sustainable growth: the role of safe and stable banking systems," Financial Stability Review, Banque de France, issue 19, pages 65-73, April.
  • Handle: RePEc:bfr:fisrev:2015:19:06
    as

    Download full text from publisher

    File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/financial-stability-review-19_2015-04.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Claudia M. Buch & Esteban Prieto, 2014. "Do Better Capitalized Banks Lend Less? Long-Run Panel Evidence from Germany," International Finance, Wiley Blackwell, vol. 17(1), pages 1-23, March.
    2. Cohen, Benjamin H. & Scatigna, Michela, 2016. "Banks and capital requirements: Channels of adjustment," Journal of Banking & Finance, Elsevier, vol. 69(S1), pages 56-69.
    3. Luc Laeven & Fabián Valencia, 2013. "Systemic Banking Crises Database," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(2), pages 225-270, June.
    4. Patrick Slovik & Boris Cournède, 2011. "Macroeconomic Impact of Basel III," OECD Economics Department Working Papers 844, OECD Publishing.
    5. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
    Full references (including those not matched with items on IDEAS)

    More about this item

    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:bfr:fisrev:2015:19:06. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael brassart). General contact details of provider: http://edirc.repec.org/data/bdfgvfr.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.