Bank Capital Regulation, Economic Stability, and Monetary Policy: What Does the Academic Literature Tell Us?

David VanHoose

Atlantic Economic Journal, 2008, vol. 36, issue 1, 14 pages

Abstract: This paper surveys academic research exploring the macroeconomic and monetary policy implications of the Basel I and Basel II systems of risk-based capital requirements. This research indicates that regulatory tightening of capital ratios can generate aggregate shocks, that capital regulation can enhance the procyclicality already inherent in banking, and that capital requirements can influence macroeconomic outcomes and alter the monetary policy transmission mechanism. The paper offers suggestions for future avenues of research on the interplay between bank capital regulation, the economy, and monetary policymaking. Copyright International Atlantic Economic Society 2008

Keywords: Bank capital regulation; E51; G28 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (31)

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DOI: 10.1007/s11293-007-9100-z

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