 Macroprudential banking regulation: Does one size fit all?Doris Neuberger and Roger Rissi No 124, Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics Abstract: The macroprudential regulatory framework of Basel III imposes the same capital and liquidity requirements on all banks around the world to ensure global competitiveness of banks. Using an agent-based model of the financial system, we find that this is not a robust framework to achieve (inter)national financial stability, because efficient regulation has to embrace the economic structure and behaviour of financial market participants, which differ from country to country. Market-based financial systems do not profit from capital and liquidity regulations, but from a ban on proprietary trading (Volcker rule). In homogeneous or bank-based financial systems, the most effective regulatory policy to ensure financial stability depends on the stability measure used. Irrespective of financial system architecture, direct restrictions of banks' investment portfolios are more effective than indirect restrictions through capital, leverage and liquidity regulations. Keywords: financial stability; systemic risk; financial system; banking regulation; agent-based model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:roswps:124 Access Statistics for this paper More papers in Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics Contact information at EDIRC. |
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