Bank regulation under fire sale externalities

Name: Bank regulation under fire sale externalities
Author: Kara, G. I., Özsoy, Satı Mehmet

İsim	Bank regulation under fire sale externalities
Yazar	Kara, G. I., Özsoy, Satı Mehmet
Basım Tarihi:	2020-06
Basım Yeri	- Oxford University Press
Tür	Süreli Yayın
Dil	İngilizce
Dijital	Evet
Yazma	Hayır
Kütüphane:	Özyeğin Üniversitesi
Demirbaş Numarası	0893-9454
Kayıt Numarası	13cce4cf-78ce-4ec8-9c44-b97e7d9eb612
Lokasyon	Economics
Tarih	2020-06
Örnek Metin	We examine the optimal design of and interaction between capital and liquidity regulations. Banks, not internalizing fire sale externalities, overinvest in risky assets and underinvest in liquid assets in the competitive equilibrium. 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 risky assets and less liquidity compared with the second best. Macroprudential liquidity requirements that complement capital regulations implement the second best, improve financial stability, and allow for more investment in risky assets.
DOI	10.1093/rfs/hhz117
Cilt	33

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Bank regulation under fire sale externalities

Yazar Kara, G. I., Özsoy, Satı Mehmet

Basım Tarihi 2020-06

Basım Yeri - Oxford University Press

Tür Süreli Yayın

Dil İngilizce

Dijital Evet

Yazma Hayır

Kütüphane Özyeğin Üniversitesi

Demirbaş Numarası 0893-9454

Kayıt Numarası 13cce4cf-78ce-4ec8-9c44-b97e7d9eb612

Lokasyon Economics

Tarih 2020-06

Örnek Metin We examine the optimal design of and interaction between capital and liquidity regulations. Banks, not internalizing fire sale externalities, overinvest in risky assets and underinvest in liquid assets in the competitive equilibrium. 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 risky assets and less liquidity compared with the second best. Macroprudential liquidity requirements that complement capital regulations implement the second best, improve financial stability, and allow for more investment in risky assets.

DOI 10.1093/rfs/hhz117

Cilt 33