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Basel III and Bank-Lending: Evidence from the United States and Europe

Sami Ben Naceur (), Jérémy Pépy and Caroline Roulet

No 17/245, IMF Working Papers from International Monetary Fund

Abstract: Using data on commercial banks in the United States and Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank-lending following the 2008 financial crisis. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.

Keywords: Basel Core Principles; Bank regulations; Loans; Commercial banks; Liquidity management; Financial crisis; United States; Europe; Financial crises; Bank credit; Financial markets; Bank rates; Deposit insurance; lending supply,bank regulatory capital,liquidity requirements,banking regulation,Government Policy and Regulation,stable fund,capital ratio,risk-weighted,U.S. bank,available amount (search for similar items in EconPapers)
Pages: 50
Date: 2017-11-15
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-fmk and nep-rmg
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