Open Daily: 10am - 10pm | Alley door pickup 10am - 7pm 3038 Hennepin Ave Minneapolis, MN
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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
The Right Balance for Banks: Theory and Evidence on Optimal Capital Requirements

The Right Balance for Banks: Theory and Evidence on Optimal Capital Requirements

Cline, William

Paperback

Series: Policy Analyses in International Economics, Book 107

AccountingInvesting & FinanceGeneral Political Science

ISBN10: 0881327212
ISBN13: 9780881327212
Publisher: Peterson Inst For Intl Economi
Published: May 23 2017
Pages: 175
Weight: 0.90
Height: 0.60 Width: 5.90 Depth: 9.00
Language: English
The global financial crisis produced an important agreement among regulators in 2010-11 to raise capital requirements for banks to protect them from insolvency in the event of another emergency. In this book, William R. Cline, a leading expert on the global financial system, employs sophisticated economic models to analyze whether these reforms, embodied in the Third Basel Accord, have gone far enough. He calculates how much higher bank capital reduces the risk of banking crises, providing a benefit to the economy. On the cost side, he estimates how much higher capital requirements raise the lending rate facing firms, reducing investment in plant and equipment and thus reducing output in the economy. Applying a plausible range of parameters, Cline arrives at estimates for the optimal level of equity capital relative to total bank assets. This study also challenges the recent too much finance literature, which holds that in advanced countries banking sectors are already too large and are curbing growth.

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