Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203520
Authors: 
Poeschl, Johannes
Zhang, Xue
Year of Publication: 
2019
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Macroeconomics I No. C18-V3
Abstract: 
We study the macroeconomic effects of bank capital requirements in an economy with two banking sectors. Banks are connected through a wholesale funding market. Anticipated banking crises occur endogenously in the form of self-fulfilling wholesale funding rollover crises. Retail bank capital requirements can reduce the frequency and severity of banking crises. Tightening retail bank capital requirements increases the size and leverage of the shadow banking sector through a novel channel that works through the anticipation of banking crises. A policy which corrects this spillover is more than twice as effective in reducing the frequency and severity of banking crises.
Subjects: 
Bank capital regulation
shadow banking
anticipated bank runs
JEL: 
E44
G24
G28
Document Type: 
Conference Paper

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