Bank capital regulation: A role for a supranational regulator ?

Carole Haritchabalet (), Laetitia Lepetit, Kévin Spinassou and Frank Strobel
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Carole Haritchabalet: CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour
Laetitia Lepetit: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Kévin Spinassou: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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Abstract: Using a simple two-country model where national or supranational regulators can set capital requirements as either risk sensitive capital or leverage ratios, we examine which of these arrangements is best. Our results demonstrate the importance of capital requirements being set at a supranational level particularly when crosscountry spillovers are large and national regulators suffer from substantial degrees of regulatory capture. We further highlight the importance of allowing for supervisory "remoteness" in this context, and show that national regulators may want to surrender regulatory power only when spillover effects are large but the degree of supervisory capture is relatively small.

Keywords: bank regulation; capital requirement; supranational; spillover; regulatory capture (search for similar items in EconPapers)
Date: 2015-06-11
Note: View the original document on HAL open archive server: https://univ-pau.hal.science/hal-02440576v1
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Published in 32nd International Symposium on Money, Banking and Finance, Jun 2015, Nice, France

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Working Paper: Bank capital regulation: a role for a supranational regulator? (2015)
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