EconPapers    
Economics at your fingertips  
 

The impact of Basel III on money creation: A synthetic analysis

Wanting Xiong and Yougui Wang

No 2017-53, Economics Discussion Papers from Kiel Institute for the World Economy (IfW)

Abstract: Recent evidences provoke broad rethinking of the role of banks in money creation. The authors argue that apart from the reserve requirement, prudential regulations also play important roles in constraining the money supply. Specifically, they study three Basel III regulations and theoretically analyze their standalone and collective impacts. The authors find that 1) the money multiplier under Basel III is not constant but a decreasing function of the monetary base; 2) the determinants of the bank's money creation capacity are regulation-specific; 3) the effective binding regulation and the corresponding money multiplier vary across different economic states and bank balance sheet conditions.

Keywords: money creation; Basel III; liquidity coverage ratio; capital adequacy ratio; leverage ratio; money multiplier (search for similar items in EconPapers)
JEL-codes: E51 G28 G18 E60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-cba, nep-mac, nep-mon, nep-pay and nep-rmg
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.economics-ejournal.org/economics/discussionpapers/2017-53
https://www.econstor.eu/bitstream/10419/167632/1/895888238.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201753

Access Statistics for this paper

More papers in Economics Discussion Papers from Kiel Institute for the World Economy (IfW) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

 
Page updated 2019-06-28
Handle: RePEc:zbw:ifwedp:201753