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Preferential Regulatory Treatment and Banks' Demand for Government Bonds

Clemens Bonner ()

Journal of Money, Credit and Banking, 2016, vol. 48, issue 6, 1195-1221

Abstract: The purpose of this paper is to analyze the impact of preferential regulatory treatment on banks' demand for government bonds. Using unique transaction‐level data, our analysis suggests that preferential treatment in microprudential liquidity and capital regulation significantly increases banks' demand for government bonds. Liquidity and capital regulation also seem to incentivize banks to substitute other bonds with government bonds. We also find evidence that this “regulatory effect” leads banks to reduce lending to the real economy.

Date: 2016
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http://hdl.handle.net/10.1111/jmcb.12331

Related works:
Working Paper: Preferential Regulatory Treatment and Banks' Demand for Government Bonds (2015) Downloads
Working Paper: Preferential regulatory treatment and banks' demand for government bonds (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:48:y:2016:i:6:p:1195-1221

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Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

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