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Media type:
E-Book;
Report
Title:
Supranational rules, national discretion: Increasing versus inflating regulatory bank capital?
Contributor:
Gropp, Reint
[Author];
Mosk, Thomas
[Author];
Ongena, Steven
[Author];
Simac, Ines
[Author];
Wix, Carlo
[Author]
imprint:
Frankfurt a. M.: Leibniz Institute for Financial Research SAFE, 2020
Language:
English
DOI:
https://doi.org/10.2139/ssrn.3736781
Origination:
Footnote:
Diese Datenquelle enthält auch Bestandsnachweise, die nicht zu einem Volltext führen.
Description:
We study how higher capital requirements introduced at the supranational level affect the regulatory capital of banks across countries. Using the 2011 EBA capital exercise as a quasi-natural experiment, we find that treated banks exploit discretion in the calculation of regulatory capital to inflate their capital ratios without a commensurate increase in their book equity and without a reduction in bank risk. Regulatory capital inflation is more pronounced in countries where credit supply is expected to tighten, suggesting that national authorities forbear their domestic banks to meet supranational requirements, with a focus on short-term economic considerations.