Optimal Bank Regulation, the Real Sector, and the State of the Economy
| Item Type | Monograph (Discussion Paper) |
| Abstract | Concerns about the procyclicality of bank regulation have motivated recent reforms that include countercyclical measures. This paper analyzes how optimal capital requirements, which balance a trade-off between financial stability and investment of the real sector, adjust during a downturn. Adding an endogenous loan market reveals equilibrium effects that strongly influence the adjustment and allows studying the implications of real shocks. The results suggest a nuanced adjustment depending on the shock: In a capital crunch, capital requirements are relaxed to prevent a sharp decline in investment. If productivity decreases, they are tightened as preserving financial stability entails a smaller cost. |
| Authors | Kogler, Michael |
| Subjects | economics finance |
| HSG Profile Area | SEPS - Economic Policy |
| Date | August 2016 |
| Depositing User | Michael Kogler |
| Date Deposited | 01 Sep 2016 15:09 |
| Last Modified | 20 Jul 2022 17:28 |
| URI: | https://www.alexandria.unisg.ch/publications/249136 |
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CitationKogler, Michael: Optimal Bank Regulation, the Real Sector, and the State of the Economy. 2016, Statisticshttps://www.alexandria.unisg.ch/id/eprint/249136
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