Financial market pressure as an impediment to the usability of regulatory capital buffers

Desislava Andreeva, Paul Bochmann and Cyril Couaillier

Macroprudential Bulletin, 2020, vol. 11

Abstract: This article discusses how market pressure can impede the usability of regulatory buffers. The capital relief measures in the euro area since the outbreak of the COVID-19 crisis had so far mixed effects on banks’ target CET1 ratio, suggesting an impeded pass-through. Market pressure can be a key explanatory factor, with pressure from credit and, critically, equity investors. JEL Classification: G01, G21, G28, C58

Keywords: bank ratings; capital buffers; capital target; macroprudential policy; market discipline; solvency-funding cost nexus (search for similar items in EconPapers)
Date: 2020-10
Note: 2285252
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbmbu:2020:0011:3

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