The Sequence of Bank Liberalisation: Financial Repression versus Capital Requirements in Russia
Koen Schoors and
Additional contact information
Rudi Vandervennet: Ghent University, Ghent, Belgium
Authors registered in the RePEc Author Service: Rudi Vander Vennet ()
Comparative Economic Studies, 2008, vol. 50, issue 2, pages 297-317
We model how the reduction of required reserves and the introduction of capital rules affect bank risk-taking behaviour in a financially repressed environment. In the absence of capital rules, the reduction of required reserves unambiguously encourages gambling behaviour. The introduction of capital rules only succeeds in mitigating this effect if capital is not too costly and loan default rates are not too high. We use evidence from the Russian banking sector to illustrate the model. We conclude that a moderate amount of financial repression may be preferable to capital rules for the purpose of securing systemic stability if loan default rates are high and the cost of capital is considerable, which may be the case in many emerging banking markets. Comparative Economic Studies (2008) 50, 297–317;. doi:10.1057/ces.2008.7
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://www.palgrave-journals.com/ces/journal/v50/n2/pdf/ces20087a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/ces/journal/v50/n2/full/ces20087a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:pal:compes:v:50:y:2008:i:2:p:297-317
Ordering information: This journal article can be ordered from
Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
http://www.palgrave- ... subscribe/index.html
Access Statistics for this article
Comparative Economic Studies is currently edited by June
More articles in Comparative Economic Studies from Palgrave Macmillan
Series data maintained by Daniel Foley ().