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Does One Size Fit All? The Impact of Liquidity Requirements on Bank's Insolvency: Evidence from Iranian Listed Banks

Author

Listed:
  • Sotoudeh Mollashahi, Vahideh

    (Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran)

  • Talebi, Mohammad

    (Department of Financial Management, Imam Sadegh University)

  • Rastegar, Mohammad Ali

    (School of Industrial and Systems Engineering, Tarbiat Modares University)

  • Mojab, Ramin

    (Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran)

Abstract

According to the Basel III regulatory framework, uniform minimum liquidity requirements have been imposed on all types of banks. Using an agent-based model of a banking system, we investigate the effects of liquidity requirements on banks' insolvency under two policy experiments in one of which the minimum liquidity requirements are applied

Suggested Citation

  • Sotoudeh Mollashahi, Vahideh & Talebi, Mohammad & Rastegar, Mohammad Ali & Mojab, Ramin, 2020. "Does One Size Fit All? The Impact of Liquidity Requirements on Bank's Insolvency: Evidence from Iranian Listed Banks," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 15(2), pages 181-197, April.
    • Handle: RePEc:mbr:jmonec:v:15:y:2020:i:2:p:181-197
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    References listed on IDEAS

    as
    1. P. Smaga & M. Wiliński & P. Ochnicki & P. Arendarski & T. Gubiec, 2018. "Can banks default overnight? Modelling endogenous contagion on the O/N interbank market," Quantitative Finance, Taylor & Francis Journals, vol. 18(11), pages 1815-1829, November.
    2. Aldasoro, Iñaki & Delli Gatti, Domenico & Faia, Ester, 2017. "Bank networks: Contagion, systemic risk and prudential policy," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 164-188.
    3. Giuliana Birindelli & Paola Ferretti & Marco Savioli, 2016. "Basel 3: Does One Size Really Fit All Banks' Business Models?," Working Paper series 16-20, Rimini Centre for Economic Analysis.
    4. J. Doyne Farmer & Duncan Foley, 2009. "The economy needs agent-based modelling," Nature, Nature, vol. 460(7256), pages 685-686, August.
    5. Doris Neuberger & Roger Rissi, 2014. "Macroprudential Banking Regulation: Does One Size Fit All?," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(1), pages 5-28.
    6. Distinguin, Isabelle & Roulet, Caroline & Tarazi, Amine, 2013. "Bank regulatory capital and liquidity: Evidence from US and European publicly traded banks," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3295-3317.
    7. Richard Bookstaber, 2012. "Using Agent-Based Models for Analyzing Threats to Financial Stability," Working Papers 12-03, Office of Financial Research, US Department of the Treasury.
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