THE ROLE OF COUNTERCYCLICAL MEASURES IN CONTROLLING THE PROCYCLICAL BEHAVIOUR OF BANKS

Irina – Raluca Badea
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Irina – Raluca Badea: University of Craiova Faculty of Economics and Business Administration

Annals of University of Craiova - Economic Sciences Series, 2015, vol. 1, issue 43, 210-218

Abstract: The global financial crisis has triggered both questions and answers to the ‘stakeholders’ of the financial system. On the one hand, the key notions that rule the financial world refer to financial stability, systemic risk and interlinked market participants. Nevertheless, the procyclicality of the monetary policy reveals the weaknesses of the authorities’ policymaking; therefore, countercyclical measures are required to be taken in order to prevent the financial system from collapsing because of the procyclical behaviour of banks.This paper aims at outlining the importance of the countercyclical policies, with regard to the regulatory framework of the monetary policy, the ongoing capital requirements of the Basel III and the incentives that influence the cyclical behavior of banks.

Keywords: monetary policy; central banks; procyclicality; countercyclical measures; Basel III; capital requirements (search for similar items in EconPapers)
JEL-codes: E32 E44 E51 G28 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:aio:aucsse:v:1:y:2015:i:43:p:210-218

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