What drives the demand of monetary financial institutions for domestic government bonds? Empirical evidence on the impact of Basel II and Basel III

Michael Lang and Michael Schröder

No 215, Frankfurt School - Working Paper Series from Frankfurt School of Finance and Management

Abstract: This paper examines the treatment of sovereign debt exposure within the Basel framework and measures the impact of bank regulation on the demand of Monetary Financial Institutions (MFI) for marketable sovereign debt. Our results suggest that bank regulation has a significant positive impact on MFI demand for domestic government securities. The results are representative for the MFI in the euro zone. They remain highly robust and significant after controlling for other influential factors and potential endogeneity.

Keywords: Monetary Financial Institutions; Financial sector regulation; Sovereign bond holdings; Investment incentives (search for similar items in EconPapers)
JEL-codes: G11 G21 G28 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ban and nep-cba
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fsfmwp:215

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