Risk-Based Capital Requirements for Banks and International Trade

Tomasz Michalski and Evren Ors ()

No 1064, HEC Research Papers Series from HEC Paris

Abstract: The authors provide the first evidence that changes in risk-based capital requirements for banks affect the real economy through international trade. Using a natural experiment – mandatory Basel II adoption in its Standardized Approach by all banks in Turkey on July 1, 2012 – they investigate the impact of new risk-weights applied to commercial letters of credit (CLC) on that country’s exports to 174 countries. The authors estimate the resulting payment-term-cost elasticity of CLC-financed trade to be between -0.5 and -1 while the overall trade elasticity to be between -0.032 and -0.179. Calculations suggest that both CLC-related bank pricing and rationing channels are involved.

Keywords: commercial letters of credit; international trade finance; exports; risk-weights; Basel II (search for similar items in EconPapers)
JEL-codes: F14 G21 G28 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2014-10-28
New Economics Papers: this item is included in nep-ara, nep-ban, nep-cba, nep-cwa, nep-int and nep-rmg
References: Add references at CitEc
Citations:

Downloads: (external link)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2515964 (application/pdf)

Related works:
Journal Article: Risk-Based Capital Requirements for Banks and International Trade (2017)
Working Paper: Risk-Based Capital Requirements for Banks and International Trade (2016)
Working Paper: Risk-Based Capital Requirements for Banks and International Trade (2014)
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:ebg:heccah:1064

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().