The purpose of this paper is to analyze the leverage ratio requirement as currently considered by the Basel Committee on Banking Supervision from both theoretical and empirical perspectives. The key concept in this paper is the asset quality index, which is obtained by dividing the risk-based...

We evaluate the effects of post-crisis liquidity regulation on the U.S. banking system. We find that regulated banks have substantially improved their liquidity ratios by holding more liquidity buffers and terming out their liabilities. However, some liquidity transformation has migrated to...

This paper uses the initial phase of the COVID-19 pandemic to examine how macroprudential frameworks developed over the past decade performed during a period of heightened financial and economic stress. It discusses a new measure of the macroprudential stance that better captures the intensity...

We introduce a general equilibrium model to analyze the interactions between liquidity regulations and banks' investment in complex assets. Complexity improves bank liquidity in good times but heightens vulnerability to runs during crises. Banks underinvest in complex assets when liquidity...

This paper presents empirical evidence on the impact of changes in capital requirements on bank lending, and delivers estimates of their costs and benefits in terms of foregone real GDP growth. The empirical analysis is based on large international datasets at a firm and country level, including...

When financial regulators require banks to hold a higher ratio of equity capital to debt funding, banks incur short-term costs as they adjust their balance sheets and lose some of the advantages associated with their existing funding mix. They then seek to maintain post-tax income by, for...

This paper analyses the impact of the new Basel III liquidity standards, in particular the liquidity coverage ratio (LCR), on the implementation of monetary policy in the Euro area. I develop a conceptual framework to investigate the interaction between the money market and monetary policy...