EconPapers    
Economics at your fingertips  
 

The Cross-border Effects of Bank Capital Regulation

Saleem Bahaj and Frederic Malherbe

No 16148, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a model for studying the international collaboration of bank capital regulation under the principle of reciprocity. We show that such a regime makes countries strategically compete for scarce bank equity capital. Raising capital requirements in a country may generate bank capital outflows as well as inflows. We pin down the condition for the sign of the capital flow and the associated externality, and highlight the implications for macroprudential regulation. Compared to full collaboration, individual countries are likely to set Basel III's Counter-Cyclical Capital Buffer too high in normal times, and too low in bad times.

Date: 2021-05
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16148 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: The cross-border effects of bank capital regulation (2024) Downloads
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:cpr:ceprdp:16148

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16148

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-23
Handle: RePEc:cpr:ceprdp:16148