Supporting sustainable growth: the role of safe and stable banking systems

S. Ingves

Financial Stability Review, 2015, issue 19, 65-73

Abstract: Banks play a key role in financial intermediation, facilitating efficient capital allocation and maturity transformation. However, this can lead to excessive risk-taking, which, if not appropriately accounted for, can increase vulnerability to financial shocks. As we have witnessed in recent years, banking crises can have a severe and persistent negative effect on financial system stability and economic growth. Moreover, these negative impacts are indiscriminate, affecting a wide variety of sectors, the labour market and even spreading distress across borders. Empirical analyses show that financial system regulation, including the new Basel III framework, helps ensure greater financial system stability, by reducing the probability of financial crises. While there may be costs in the short-term, these are borne by those taking the risks and, importantly, outweighed by the benefits to society as a whole. In this way, banking system regulation, and the Basel III framework in particular, plays a significant role in supporting strong and durable growth.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... eview-19_2015-04.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bfr:fisrev:2015:19:06

Access Statistics for this article

More articles in Financial Stability Review from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().