Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/287478 
Authors: 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Financial Services Research [ISSN:] 1573-0735 [Volume:] 61 [Issue:] 2 [Publisher:] Springer US [Place:] New York, NY [Year:] 2021 [Pages:] 167-185
Publisher: 
Springer US, New York, NY
Abstract: 
In this paper, I analyze the effectiveness of different capital regulations in mitigating the effects of moral hazard that exists only for systemically important banks. Leverage restrictions have the potential to reduce the fraction of banks that are systemically important but do not mitigate moral hazard for those that are. Risk adjusted requirements could mitigate moral hazard (of banks with low leverage) but do not affect (endogenous) systemic risk. A combination of both requirements as proposed by the Basel III framework can be successful, although only under restrictive conditions.
Subjects: 
Capital regulation
Moral hazard
Leverage
JEL: 
G21
G28
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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