This paper reviews the cost-benefit analysis, or “regulatory impact analysis” (RIA), in US bank regulators’ risk-based capital (RBC) rule proposals. We review the principles of cost-benefit analysis and its application by US bank regulators. We provide a brief background on RBC rules and...

Recent changes in U.S. banking regulation have emphasized risk-based capital (RBC) as an indicator of bank soundness. This paper compares the RBC ratio to the standard capital ratio of equity over assets. We regress the capital and RBC ratios of bank holding companies from 1999 through 2010...