Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39333
Authors: 
König, Philipp Johann
Year of Publication: 
2010
Series/Report no.: 
SFB 649 discussion paper 2010,027
Abstract: 
Using the model of Rochet and Vives (2004), this note shows that a prudential regulator can in general not mitigate a bank's failure risk solely by means of liquidity requirements. However, their effectiveness can be restored if, in addition, minimum capital requirements are met. This provides a rationale for capital requirements beyond the commonly envoked reasoning that they are to be used to control the riskiness of banks' asset portfolios.
Subjects: 
prudential regulation
liquidity requirements
minimum capital requirements
global games
JEL: 
G21
G28
Document Type: 
Working Paper

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