Basel Accord and Financial Intermediation: The Impact of Policy

Martin Berka and Christian Zimmermann

No 3724, CESifo Working Paper Series from CESifo

Abstract: This paper studies loan activity in a context where banks must follow Basel Accord-type rules and acquire financing from households. Loan activity typically decreases when entrepreneurs’ investment returns decline, and we study which type of policy could revigorate an economy in a trough. We find that active monetary policy increases loan volume even when the economy is in good shape; introducing active capital requirement policy can be effective as well if it implies tightening of regulation in bad times. This is performed with an heterogeneous agent economy with occupational choice, financial intermediation and aggregate shocks to the distribution of entrepreneurial returns.

Keywords: bank capital channel; capital requirements; Basel Accord; occupational choice; bankruptcy; credit crunch (search for similar items in EconPapers)
JEL-codes: E22 E44 E58 G28 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Basel Accord and Financial Intermediation: The Impact of Policy (2018)
Working Paper: Basel Accord and Financial Intermediation: The Impact of Policy (2012)
Working Paper: Basel Accord and financial intermediation: the impact of policy (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3724

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