Many central banks in emerging economies have used reserve requirements (RR) to alleviate the trade-off between financial stability and price stability in recent years. Notwithstanding their widespread use, transmission channels of RR have remained largely as a black-box. In this paper, we use...

This study examines whether bank shareholders bear the burden of required reserves tax by analyzing the reaction of banks’ stock returns to the changes in the required reserve ratio. Results show that increases in reserve requirements significantly lower bank returns implying that shareholders...