Working Paper 139 - The Macroeconomic Impact of Higher Capital Ratios on African Economies
Motivated by the recent debate on the macroeconomic implications of the new bank regulatory standards known as Basel III, this paper examines the impact of higher capital ratios on aggregate output in a comprehensive panel of African economies. We quantify benefits stemming from lower probability of banking crises due to more stringent capital holdings using a multivariate logit model. Costs, measured as the impact of higher lending rates premia over deposit rates due to higher capital levels on aggregate output, are quantified using panel data models with fixed effects. We find that there are net benefits associated with tightened capital ratios, and conclude that, by strengthening the resilience of its banking systems, the new global standards might lead to long-term welfare gains for African economies..
|Date of creation:||28 Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: 15 Avenue du Ghana P.O.Box 323-1002 Tunis-Belvedère, Tunisia|
Phone: (+216) 71 10 39 00
Fax: (225) 21.77.53
Web page: http://www.afdb.org/en/knowledge/publications/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:adb:adbwps:359. 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: (Adeleke Oluwole Salami)
If references are entirely missing, you can add them using this form.