Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259704 
Year of Publication: 
2018
Citation: 
[Journal:] Swiss Journal of Economics and Statistics [ISSN:] 2235-6282 [Volume:] 154 [Issue:] 1 [Publisher:] Springer [Place:] Heidelberg [Year:] 2018 [Pages:] 1-21
Publisher: 
Springer, Heidelberg
Abstract: 
Ten years after the worst financial crisis of the post-war period, Switzerland has established a Too-Big-To-Fail (TBTF) framework. Under this framework, the two large Swiss banks are subject to substantial capital requirements. It is not obvious whether the TBTF capital requirements are sufficient to prevent banks from plunging the country into a financial crisis once again. We estimate the social costs and benefits of higher capital requirements for the two large Swiss banks and derive socially optimal capital ratios from the cost-benefit trade-off. Our results show that Swiss TBTF capital requirements still fall short of socially optimal capital ratios.
Subjects: 
Financial regulation
Bank equity capital requirements
Capital structure
Elasticity of substitution
Translog production function
JEL: 
G21
G28
E20
E22
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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