The cross-border effects of bank capital regulation

• 成果类型: Article
• 署名作者: Bahaj, Saleem; Malherbe, Frederic
• 署名单位: University of London; University College London; Bank of England; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103912
• 发表日期: 2024
• 关键词: CCyB; International coordination; Race to the bottom; Race to the top; Liquidity services

摘要

We study the international coordination of bank capital requirements under a host-country rule: the requirement depends on where the borrower, not the bank, is located. In such a regime, countries compete for scarce bank equity capital. Raising a country's requirement may generate bank capital outflows as well as inflows. We pin down the condition for the sign of the capital flow and the associated externality, and highlight the policy implications. Absent collaboration, overshooting is likely: individual countries have an incentive to increase Basel III's Counter-Cyclical Capital Buffer too much in good times and cut it too much in bad times.