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Bank Regulation and Post-2008 US Monetary Policy

Author

Listed:
  • Ruopu Hu

    (Kobe University)

  • Andreas Schabert

    (University of Cologne)

Abstract

Since U.S. bank capital holdings began rising almost concurrently with the monetary policy change after 2008, we examine the role of capital requirements for monetary policy regimes. While standard models predict that equilibrium determination and responses to aggregate shocks are fundamentally affected at the zero lower bound (ZLB), we show that these effects are absent when bank capital requirements are binding. Estimating a model version with occasionally binding capital requirements, we find that they have been almost permanently binding after 2008. We further show that capital requirements neither restore relevance of money supply nor amplify responses to macroeconomic shocks above the ZLB.

Suggested Citation

  • Ruopu Hu & Andreas Schabert, 2026. "Bank Regulation and Post-2008 US Monetary Policy," ECONtribute Discussion Papers Series 397, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:397
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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_397_2026.pdf
    File Function: First version, 2026
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    More about this item

    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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