IDEAS home Printed from https://ideas.repec.org/a/eee/empfin/v85y2026ics0927539825001069.html

Global standard and bank liquidity creation: A case study of Basel III liquidity regulation

Author

Listed:
  • Gam, Yong Kyu

Abstract

Can the introduction of a new global standard directly impact the operations of domestically regulated banks before it is enacted through national legislation? This paper explores this question by examining the effects of the Basel III liquidity standard on liquidity creation by U.S. banks. Following the Basel Committee’s endorsement of this standard in December 2010, banks with low liquidity immediately reduced their asset-side liquidity creation by holding more liquid assets. At the same time, these banks increased their liability-side liquidity creation by attracting more deposits through higher deposit interest rates—well before the standard was implemented as domestic regulation in the U.S. These findings provide empirical evidence that enhanced global regulatory cooperation can cause newly established international standards to act as direct and immediate regulatory shocks to domestically regulated financial institutions, even in the absence of national legislation.

Suggested Citation

  • Gam, Yong Kyu, 2026. "Global standard and bank liquidity creation: A case study of Basel III liquidity regulation," Journal of Empirical Finance, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:empfin:v:85:y:2026:i:c:s0927539825001069
    DOI: 10.1016/j.jempfin.2025.101684
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927539825001069
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jempfin.2025.101684?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - 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:eee:empfin:v:85:y:2026:i:c:s0927539825001069. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jempfin .

    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.