Cyclical Effects of Bank Capital Buffers with Imperfect Credit Markets: International Evidence

A. Fonseca, F. González and Luiz Awazu Pereira da Silva ()

No 216, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: This paper analyzes the cyclical effects of bank capital buffers using an international sample of 2,361 banks from 92 countries over the 1990-2007 period. We find that capital buffers reduce the bank credit supply but – through what could be “monitoring or signaling effects” – have also an expansionary effect on economic activity by reducing lending and deposit rate spreads. This influence on lending and deposit rate spreads is more pronunced in developing countries and during downturns. The results suggest that capital buffers have a counter-cyclical effect in these countries. Our data do not suggest differences in the cyclical effects of capital buffers between Basel I and Basel II.

Date: 2010-10
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://www.bcb.gov.br/content/publicacoes/WorkingPaperSeries/wps216.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bcb:wpaper:216

Access Statistics for this paper

More papers in Working Papers Series from Central Bank of Brazil, Research Department
Bibliographic data for series maintained by Rodrigo Barbone Gonzalez ().