Systemically Important Banks and Capital Regulation Challenges [E-Book] / Patrick Slovik
Slovik, Patrick.
Paris : OECD Publishing, 2012
18 p. ; 21 x 29.7cm.
englisch
10.1787/5kg0ps8cq8q6-en
OECD Economics Department Working Papers ; 916
Economics
Full Text
Bank regulation might have contributed to or even reinforced adverse systemic shocks that materialised during the financial crisis. Capital regulation based on risk-weighted assets encourages innovation designed to circumvent regulatory requirements and shifts banks’ focus away from their core economic functions. Tighter capital requirements based on risk-weighted assets may further contribute to these skewed incentives. The estimated macroeconomic costs of redirecting banks’ attention away from such unconventional business practices are low. During a medium-term adjustment period, for each percentage point of bank equity, regulation that is not based on risk-weighted assets would affect annual GDP growth by -0.02 percentage point more than under the risk-weighted assets framework. Refocusing banks’ attention toward their main economic functions is a core requirement for durable financial stability and sustainable economic growth.