Does a leverage ratio requirement increase bank stability?

Ilkka Kiema and Esa Jokivuolle ()

No 1676, Working Paper Series from European Central Bank

Abstract: Basel III has introduced a non-risk-weighted leverage ratio requirement (LRR) which complements the internal ratings based (IRB) capital requirements. It provides a backstop against model risk which arises if some loans get incorrectly rated and become toxic. We study the effects of the LRR on lending strategies and its implications for banks JEL Classification: D41, D82, G14, G21, G28

Keywords: bank regulation; Basel III; capital requirements; credit risk; leverage ratio (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-ban, nep-cba and nep-rmg
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Citations: View citations in EconPapers (20)

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Journal Article: Does a leverage ratio requirement increase bank stability? (2014)
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