The effects of capital requirements on real economy: a cointegrated VAR approach for US commercial banks

Maria Grazia Miele

No 163, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: This paper addresses the following questions: which was the contribution of banks’ assets to the US’ expansion in the period until the financial crisis? Did commercial banks respect capital requirements? The two questions are strictly interrelated as, according to a recent literature, business cycle is directly related to banks’ capital requirements for market and credit risk. The analysis highlight that US commercial banks actually respected capital requirements but these were not relevant in the explanation of US growth; it confirms that most of the growth can instead be explained by the rise in productivity.Nevertheless, the analysis does not consider the role of the non banking intermediation (investment banks, broker dealers, mutual funds, etc.) that steadily increased until the crisis. Its effects over real economy could be investigated in further work.

Keywords: commercial banks; crisis; capital requirements; business cycle (search for similar items in EconPapers)
JEL-codes: E32 E44 G01 G21 (search for similar items in EconPapers)
Pages: 33
Date: 2013-11
New Economics Papers: this item is included in nep-cba and nep-mac
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