Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191251
Authors: 
Mankart, Jochen
Michaelides, Alexander
Pagratis, Spyros
Year of Publication: 
2018
Series/Report no.: 
Bundesbank Discussion Paper 51/2018
Abstract: 
We estimate a dynamic structural banking model to examine the interaction between risk-weighted capital adequacy and unweighted leverage requirements, their differential impact on bank lending, and equity buffer accumulation in excess of regulatory minima. Tighter risk-weighted capital requirements reduce loan supply and lead to an endogenous fall in bank profitability, reducing bank incentives to accumulate equity buffers and, therefore, increasing the incidence of bank failure. Tighter leverage requirements, on the other hand, increase lending, preserve bank charter value and incentives to accumulate equity buffers, therefore leading to lower bank failure rates.
Subjects: 
Banking
Equity Buffers
Regulatory Interactions
JEL: 
E44
G21
G38
ISBN: 
978-3-95729-531-6
Document Type: 
Working Paper

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