To the best of our knowledge, this is the first study to estimate the effect of liquidity regulation on bank balance … sheets. It takes advantage of the fact that not all banks were made subject to tighter liquidity regulation by the UK … find that banks adjusted both their asset and liability structures to meet tighter liquidity requirements. Banks increased …

-term resilience. Investigating the effects of such liquidity regulation on bank balance sheets, we find (i) cointegration of liquid …Under Basel III rules, banks became subject to a liquidity coverage ratio (LCR) from 2015 onward, to promote short … assets and liabilities, to maintain a short-term liquidity buffer; and (ii) that adjustment in the liquidity ratio is skewed …

We examine the optimal design of and interaction between capital and liquidity regulations. Banks, not internalizing …. Capital requirements can alleviate the inefficiency, but banks respond by decreasing their liquidity ratios. When capital … requirements are the only available tool, the regulator tightens them to offset banks' lower liquidity ratios, leading to fewer …

We develop a structural model for valuing bank balance sheet components such as the equity and debt value, the value … for the government when the bank is operated by private shareholders including the present value of a possible future … the bank. In this case, the shareholders lose part (or all) of the capital that they hold in the bank, the creditors lose …

This paper examines the welfare implications of bank capital requirements in a general equilibrium model in which a … of minimum Tier 1 capital requirement is 8%, greater than that prescribed by both Basel II and III. Increasing bank …

This paper examines the optimal design of and interaction between capital and liquidity regulations in a model … characterized by fire sale externalities. In the model, banks can insure against potential liquidity shocks by hoarding sufficient … precautionary liquid assets. However, it is never optimal to fully insure, so realized liquidity shocks trigger an asset fire sale …

Making use of a structural model that allows for optimal liquidity management, we study the role that repos play in a … bank's financing structure. In our model the bank's assets consist of illiquid loans and liquid reserves and are financed … to an exogenous rollover risk. We show that the use of repos inflicts two types of indirect (“shadow”) costs on the bank …

regulatory requirements. Our analytic characterization of the bank policy choices shows that imposing solely liquidity … requirements leads to lower bank losses in default at the cost of an increased likelihood of default. Combining liquidity …We develop a dynamic model of banking to assess the effects of liquidity and leverage requirements on banks' insolvency …

buffer appears to crowd out bank lending and lead to a migration of liquidity risks to banks that are not subject to … volatility in the liquidity premium. A central bank committed liquidity facility can improve the current quantity …This paper investigates, theoretically and empirically, the effects of liquidity regulation on the banking system. We …