The Cost of Regulatory Capital

Matthew Plosser and Joao Santos

No 20181003, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Banks contend that equity capital is expensive and that an increase in capital requirements will adversely impact bank services, including the volume and cost of mortgages and corporate loans. For example, JPMorgan CEO Jamie Dimon said in 2017 that “It is clear that the banks have too much capital…and more of that capital can be safely used to finance the economy.” In a recent staff report, we compare the different treatments of short-term credit commitments under the Basel I and Basel II Accords to assess the effect of capital regulation on banks’ cost of capital.

Keywords: Cost; of; bank; regulatory; capital (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2018-10-03
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Citations: View citations in EconPapers (2)

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