Basel III: Long-term Impact on Economic Performance and Fluctuations

Paolo Angelini, Laurent Clerc, Vasco Cúrdia, Leonardo Gambacorta, Andrea Gerali (andrea.gerali@bancaditalia.it), Alberto Locarno (alberto.locarno@bancaditalia.it), Roberto Motto, Werner Roeger, Skander Van den Heuvel (skander.j.vandenheuvel@frb.gov) and Jan Vlcek

Manchester School, 2015, vol. 83, issue 2, 217-251

Abstract: type="main">

Using a wide range of macroeconomic and econometric models we assess the long-term economic impact of the Basel III reform. Our main results are the following. (1) The economic costs of the new regulatory standards for bank capital and liquidity are considerably below existing estimates of the benefits that the reform should have by reducing the probability of banking crises (Basel Committee on Banking Supervision (2010) ‘An Assessment of the Long-term Impact of Stronger Capital and Liquidity Requirements’, Basel). (2) The reform dampens output volatility modestly, although there is some heterogeneity across models. (3) The adoption of countercyclical capital buffers can substantially amplify the dampening effect on output volatility.

Date: 2015
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Related works:
Working Paper: Basel III: Long-term impact on economic performance and fluctuations (2011)
Working Paper: BASEL III: Long-term impact on economic performance and fluctuations (2011)
Working Paper: BASEL III: Long-term impact on economic performance and fluctuations (2011)
Working Paper: BASEL III: long-term impact on economic performance and fluctuations (2011)
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