Bank Regulation and Macroeconomic Fluctuations

Charles Goodhart, Boris Hofmann and Miguel Segoviano

Oxford Review of Economic Policy, 2004, vol. 20, issue 4, 591-615

Abstract: Over the last two decades, macroeconomic cycles were frequently associated with boom--bust cycles in bank lending and asset prices, often followed by financial instability. In this paper we argue that (i) the new pattern of macroeconomic cycles is partly the result of banking-sector liberalization since the early/mid-1970s, which has increased the procyclicality of the financial system; (ii) the regulation of bank capital in the form of capital adequacy requirements is itself inherently procyclical and may therefore amplify business-cycle fluctuations; (iii) the new Basel II Accord may considerably accentuate the procyclicality of the regulatory system. Copyright 2004, Oxford University Press.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (72)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:oup:oxford:v:20:y:2004:i:4:p:591-615

Access Statistics for this article

Oxford Review of Economic Policy is currently edited by Christopher Adam

More articles in Oxford Review of Economic Policy from Oxford University Press and Oxford Review of Economic Policy Limited
Bibliographic data for series maintained by Oxford University Press (joanna.bergh@oup.com).