Mankart, Jochen; Michaelides, Alexander G.; Pagratis, Spyros - 2019
We estimate a dynamic structural banking model to examine the interaction between risk-weighted capital adequacy and … 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 …