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Prudential regulation in an artificial banking system


  • Quinaz, Pedro Dias
  • Curto, José Dias


This study is an exploratory analysis of the economic role of banks under different prudential frameworks. It considers an agent-based computational model populated by consumers, firms, banks, and a central bank whose out-of-equilibrium interactions replicate the conjunct dynamics of a banking system, a financial market and the real economy. A calibrated version of the model is shown to provide an intelligible account of several recurring economic phenomena, thus constituting a favorable ground for policy analysis. The investigation provides a valuable methodological contribution to the field of banking research and sheds new light on the role of banks and their prudential regulation. Specifically, the results suggest that banks are key economic agents. Through their financial intermediation activity, credit institutions facilitate investment and promote growth.

Suggested Citation

  • Quinaz, Pedro Dias & Curto, José Dias, 2016. "Prudential regulation in an artificial banking system," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-55.
  • Handle: RePEc:zbw:ifweej:201631

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    References listed on IDEAS

    1. Arthur, W. Brian, 2006. "Out-of-Equilibrium Economics and Agent-Based Modeling," Handbook of Computational Economics,in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 32, pages 1551-1564 Elsevier.
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    Cited by:

    1. Xiong, Wanting & Wang, Yougui, 2017. "The impact of Basel III on money creation: A synthetic analysis," Economics Discussion Papers 2017-53, Kiel Institute for the World Economy (IfW).

    More about this item


    agent-based computational model; financial intermediation; prudential policy; bank regulation;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation


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