Credit allocation, capital requirements and output

Esa Jokivuolle, Ilkka Kiema, Timo Vesala

Tutkimustuotos: TyöpaperiKeskustelupaperiAmmatillinen

Abstrakti

We show how banks’ excessive risk-taking, stemming from informational
asymmetries in loan markets, can lead to an excessive output loss when a
recession starts. Risk-based capital requirements can alleviate the output loss by
reducing excessive risk-taking in ‘normal’ times. Model simulations suggest that
the differentiation of risk-weights in the Basel framework might be further
increased in order to take full advantage of the allocational effects of capital
requirements. Our analysis also provides a new rationale for the countercyclical
elements of capital requirements.
Alkuperäiskielienglanti
JulkaisupaikkaHelsinki
KustantajaBank of Finland
Sivumäärä38
ISBN (painettu)978-952-462-618-7
ISBN (elektroninen)978-952-462-619-4
TilaJulkaistu - 2010
OKM-julkaisutyyppiD4 Julkaistu kehittämis- tai tutkimusraportti taikka -selvitys

Tieteenalat

  • 511 Kansantaloustiede

Siteeraa tätä

Jokivuolle, E., Kiema, I., & Vesala, T. (2010). Credit allocation, capital requirements and output. (Bank of Finland Research Discussion Papers; Nro 17/2010). Helsinki: Bank of Finland.