An Empirical Economic Assessment Of The Costs And Benefits Of Bank Capital In The Us
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Author | : Simon Firestone |
Publisher | : |
Total Pages | : 0 |
Release | : 2017 |
Genre | : |
ISBN | : |
Download An Empirical Economic Assessment of the Costs and Benefits of Bank Capital in the Us Book in PDF, Epub and Kindle
We evaluate the economic costs and benefits for bank capital levels in the United States. The framework and analysis is similar to that found in previous studies though we tailor the analysis to the specific features and experience of the U.S. financial system and account for the impact of new financial regulations. The conceptual framework identifies the benefits of bank capital with a lower probability of financial crises, which result in decreased economic output. The costs of bank capital are identified with increases in banks cost of funding, which are passed along to borrowers and result in a lower level of economic output. Optimal capital maximize the difference between benefits and costs or net benefits. Using a range of empirical estimates of net benefits we find that the optimal level of bank capital in the United States ranges from just over 13 percent to over 26 percent.
Author | : Jihad Dagher |
Publisher | : International Monetary Fund |
Total Pages | : 38 |
Release | : 2016-03-03 |
Genre | : Business & Economics |
ISBN | : 1498387713 |
Download Benefits and Costs of Bank Capital Book in PDF, Epub and Kindle
The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been at the core of the post-crisis policy debate. This paper contributes to the debate by focusing on how much capital would have been needed to avoid imposing losses on bank creditors or resorting to public recapitalizations of banks in past banking crises. The paper also looks at the welfare costs of tighter capital regulation by reviewing the evidence on its potential impact on bank credit and lending rates. Its findings broadly support the range of loss absorbency suggested by the Financial Stability Board (FSB) and the Basel Committee for systemically important banks.
Author | : Mohamed Belkhir |
Publisher | : International Monetary Fund |
Total Pages | : 44 |
Release | : 2019-12-04 |
Genre | : Business & Economics |
ISBN | : 1513519808 |
Download Bank Capital and the Cost of Equity Book in PDF, Epub and Kindle
Using a sample of publicly listed banks from 62 countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalized banks enjoy lower equity costs. Our baseline estimations indicate that a 1 percentage point increase in a bank’s equity-to-assets ratio lowers its cost of equity by about 18 basis points. Our results also suggest that the form of capital that investors value the most is sheer equity capital; other forms of capital, such as Tier 2 regulatory capital, are less (or not at all) valued by investors. Additionally, our main finding that capital has a negative effect on banks’ cost of equity holds in both developed and developing countries. The results of this paper provide the missing evidence in the debate on the effects of higher capital requirements on banks’ funding costs.
Author | : William R. Cline |
Publisher | : |
Total Pages | : |
Release | : 2016 |
Genre | : |
ISBN | : |
Download Benefits and Costs of Higher Capital Requirements for Banks Book in PDF, Epub and Kindle
Author | : Gianni De Nicolo |
Publisher | : |
Total Pages | : 15 |
Release | : 2018 |
Genre | : |
ISBN | : |
Download The Costs and Benefits of Bank Capital Requirements Book in PDF, Epub and Kindle
This paper presents empirical evidence on the impact of changes in capital requirements on bank lending, and delivers estimates of their costs and benefits in terms of foregone real GDP growth. The empirical analysis is based on large international datasets at a firm and country level, including data of the 2007-2009 crisis and beyond. I find that an increase in regulatory capital ratios reduces real GDP growth, with this reduction offsetting its benefits in terms of a reduced probability of a banking crisis. This evidence suggests that the net benefits of an increase in capital requirements may be negligible.
Author | : David K. Miles |
Publisher | : |
Total Pages | : 54 |
Release | : 2011 |
Genre | : |
ISBN | : |
Download Optimal bank capital Book in PDF, Epub and Kindle
Author | : Jihad Dagher |
Publisher | : |
Total Pages | : 38 |
Release | : 2016 |
Genre | : Bank capital |
ISBN | : 9781513538525 |
Download Benefits and Costs of Bank Capital Book in PDF, Epub and Kindle
The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been at the core of the post-crisis policy debate. This paper contributes to the debate by focusing on how much capital would have been needed to avoid imposing losses on bank creditors or resorting to public recapitalizations of banks in past banking crises. The paper also looks at the welfare costs of tighter capital regulation by reviewing the evidence on its potential impact on bank credit and lending rates. Its findings broadly support the range of loss absorbency suggested by the Financial Stability Board (FSB) and the Basel Committee for systemically important banks.
Author | : Mr.Luc Laeven |
Publisher | : International Monetary Fund |
Total Pages | : 34 |
Release | : 2014-05-08 |
Genre | : Business & Economics |
ISBN | : 1484363728 |
Download Bank Size and Systemic Risk Book in PDF, Epub and Kindle
The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or “too big to fail” subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on “too big to fail” subsidies, and its policy message is in line with this earlier work.
Author | : Joseph M. Berrospide |
Publisher | : DIANE Publishing |
Total Pages | : 50 |
Release | : 2011-04 |
Genre | : Business & Economics |
ISBN | : 1437939864 |
Download Effects of Bank Capital on Lending Book in PDF, Epub and Kindle
The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. The authors use panel-regression techniques to study the lending of large bank holding companies (BHCs) and find small effects of capital on lending. They then consider the effect of capital ratios on lending using a variant of Lown and Morgan's VAR model, and again find modest effects of bank capital ratio changes on lending. The authors¿ estimated models are then used to understand recent developments in bank lending and, in particular, to consider the role of TARP-related capital injections in affecting these developments. Illus. A print on demand pub.
Author | : |
Publisher | : |
Total Pages | : |
Release | : 2019 |
Genre | : |
ISBN | : 9789292592639 |
Download The Costs and Benefits of Bank Capital Book in PDF, Epub and Kindle