The Effects of Bank Capital on Lending: What Do We Know, and What Does It Mean?
Capital requirements are the principal tool of macroprudential regulation of banks. Bank capital serves both as a buffer and as a disincentive to excessive risk taking. When general equilibrium effects are taken into account, however, it is not clear that higher capital requirements will reduce the level of risk in the banking system. In addition, an increase in the required capital ratio can force banks to take on more risk in order to achieve target rates of return.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gianni De Nicolo & Marcella Lucchetta, 2009.
"Financial Intermediation, Competition, and Risk; A General Equilibrium Exposition,"
IMF Working Papers
09/105, International Monetary Fund.
- Di Nicolo, G. & Lucchetta, M., 2010. "Financial Intermediation, Competition, and Risk : A General Equilibrium Exposition," Discussion Paper 2010-67S, Tilburg University, Center for Economic Research.
When requesting a correction, please mention this item's handle: RePEc:ijc:ijcjou:y:2010:q:4:a:9. 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: (Bank for International Settlements)
If references are entirely missing, you can add them using this form.