Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144889
Authors: 
Haufler, Andreas
Maier, Ulf
Year of Publication: 
2016
Series/Report no.: 
Munich Discussion Paper 2016-5
Abstract: 
Several countries have recently introduced national capital standards exceeding the internationally coordinated Basel III rules, thus suggesting a "race to the top" in capital standards. We study regulatory competition when banks are heterogeneous and give loans to firms that produce output in an integrated market. In this setting capital requirements change the pool quality of banks in each country and inflict negative externalities on neighboring jurisdictions by shifting risks to foreign taxpayers and by reducing total credit supply and output. Non-cooperatively set capital standards are higher than coordinated ones when governments care equally about bank profits, taxpayers, and consumers.
Subjects: 
regulatory competition
capital requirements
bank heterogeneity
JEL: 
G28
F36
H73
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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