The impact of a higher leverage ratio on the South African economy

Rob Davies, Laurence Harris and Konstantin Makrelov

No wp-2019-35, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: We employ a micro-founded and stock-and-flow-consistent model to study the impact of a higher leverage ratio on the South African economy. The model provides a rich representation of institutional balance sheets. The relationship between bank capital, risk-taking behaviour, lending spreads, and economic activity is highlighted. The financial accelerator mechanism operates through the balance sheets of all economic institutions. The introduction of a higher leverage ratio is likely to generate negative economic impacts in the short run.

Keywords: Computable general equilibrium; Financial dynamics; Leverage ratio; Stock and flow; Risk management (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-rmg
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The impact of higher leverage ratios on the South African economy (2021)
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