Benefits and Costs of Bank Capital

The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been at the core of the post-crisis policy debate. This paper contributes to the debate by focusing on how much capital would have been needed to avoid imposing losses on bank creditors or resorting to...

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Bibliographic Details
Main Author: Dagher, Jihad
Other Authors: Dell'Ariccia, Giovanni, Laeven, Luc, Ratnovski, Lev
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2016
Series:Staff Discussion Notes
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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651 4 |a United States 
653 |a Economic & financial crises & disasters 
653 |a Depository Institutions 
653 |a Credit 
653 |a Asset requirements 
653 |a Capital adequacy requirements 
653 |a Banks 
653 |a Finance 
653 |a Financial crises 
653 |a Banks and banking 
653 |a Industries: Financial Services 
653 |a Monetary economics 
653 |a Financial institutions 
653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
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653 |a Financial Institutions and Services: Government Policy and Regulation 
653 |a Mortgages 
653 |a Nonperforming loans 
653 |a Money 
653 |a Loans 
653 |a Banks and Banking 
653 |a Financial Institutions and Services: General 
653 |a Financial regulation and supervision 
653 |a Bank credit 
653 |a Banking crises 
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653 |a Financial Risk Management 
653 |a Money and Monetary Policy 
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520 |a The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been at the core of the post-crisis policy debate. This paper contributes to the debate by focusing on how much capital would have been needed to avoid imposing losses on bank creditors or resorting to public recapitalizations of banks in past banking crises. The paper also looks at the welfare costs of tighter capital regulation by reviewing the evidence on its potential impact on bank credit and lending rates. Its findings broadly support the range of loss absorbency suggested by the Financial Stability Board (FSB) and the Basel Committee for systemically important banks