Basel 3: Does One Size Really Fit All Banks' Business Models?

Giuliana Birindelli, Paola Ferretti and Marco Savioli

Working Paper series from Rimini Centre for Economic Analysis

Abstract: Based on a sample of eurozone banks classified into six business models over the period 2001–2014, this paper aims to investigate whether and how strongly the Basel 3 requirements affect differently the stability of banks working under different business models. Our findings show that, irrespective of the business model, the most positive driver of banks' stability is the leverage ratio, followed by the net stable funding ratio. The interactions with banks' business models allow us to highlight significant differences in the coefficients of the Basel 3 variables. In particular, savings banks are predicted to gain the greatest advantage from our set of identified reform measures in banking prudential regulation; on the contrary, commercial and investment banks are the least advantaged. Thus, our findings stress the need to revise the current "one-size-fits-all" prudential framework.

Keywords: Basel 3; banks' business model; financial stability (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-ban, nep-cba and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:16-20

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