This paper assesses the macroeconomic implications of the Basel III finalisation for the euro area, employing a large-scale semi-structural model encompassing over 90 banks and 19-euro area economies. The new regulatory framework will influence banks’ reactions to economic conditions and, as a...

This paper looks at the macroeconomic impact of the two policies proposed by ECB Banking Supervision to tackle the high share of non-performing loans (NPLs) on the balance sheets of euro area banks. The first is the coverage expectations for new NPLs set out in the Addendum to the ECB's NPL...

Many commentators have argued that if the Federal Reserve had followed a stricter monetary policy earlier this decade when the housing bubble was forming, and if Congress had not deregulated banking but had imposed tighter financial standards, the housing boom and bust - and the subsequent...

We analyse the costs and benefits of increasing capital requirements for Danish banks. Costs can be close to 0 if banks suspend dividend payments for a period of time as banks accumulate capital and if investors' required return falls. The latter implies that the Modigliani-Miller effect is...

After analyzing the different reasons why the financial system and also the regulatory framework induced procyclicality, this paper reviews the experiences of three countries which have introduced dynamic provisioning as a regulatory tool to limit procyclicality. The case of Spain - the country...

After analyzing the different reasons why the financial system and also the regulatory framework induced procyclicality, this paper reviews the experiences of three countries which have introduced dynamic provisioning as a regulatory tool to limit procyclicality. The case of Spain - the country...

After the destructive impact of the global financial crisis of 2008, many believe that pre-crisis financial market regulation did not take the "big picture" of the system suffciently into account and, subsequently, financial supervision mainly "missed the forest for the trees". As a result, the...

This paper makes a static profit model of commercial banks with double constraint , then we find that: the rate of None-performing loans is inversely proportional to the commercial bank's cost and profit efficiency, the rate of capital adequacy, statutory reserve shows None-linear relationship...

Both the Great Depression and the Great Recession followed systemic banking crises and preceded unusually weak and slow recoveries. The prior literature has identified monetary, household demand, and credit effects as contributors to the severe and prolonged downturns. This paper studies a...