The dark side of implementing Basel capital requirements: Theory, evidence, and policy

• Main Authors: Aurelio GURREA-MARTINEZ, REMOLINA, Nydia
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: capital requirements; Basel Accords; Basel III; Basel Committee; financial regulation; access to finance; tax benefits of debt; financial inclusion; economic growth; Business Organizations Law; Law and Economics
• Online Access: https://ink.library.smu.edu.sg/sol_research/2924; https://ink.library.smu.edu.sg/context/sol_research/article/4882/viewcontent/jgz002_Dark_side_Basel_pvoa.pdf
• Institution: Singapore Management University

Most financial systems around the world have imposed new capital requirements for banks in the past years. This policy seems to be justified on two powerful economic grounds. First, better capitalized banks promote financial stability by reducing banks’ incentives to take risks and increasing banks’...