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Title:Basel accord and financial intermediation: The impact of policy PDF Logo
Authors:Berka, Martin
Zimmermann, Christian
Issue Date:2012
Series/Report no.:CESifo working paper: Monetary Policy and International Finance 3724
Abstract:This paper studies loan activity in a context where banks must follow Basel Accord-type rules and acquire financing from households. Loan activity typically decreases when entrepreneurs' investment returns decline, and we study which type of policy could revigorate an economy in a trough. We find that active monetary policy increases loan volume even when the economy is in good shape; introducing active capital requirement policy can be effective as well if it implies tightening of regulation in bad times. This is performed with an heterogeneous agent economy with occupational choice, financial intermediation and aggregate shocks to the distribution of entrepreneurial returns.
Subjects:bank capital channel
capital requirements
Basel Accord
occupational choice
bankruptcy
credit crunch
JEL:E44
E22
G28
E58
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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