The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future
The authors test for emerging economies, the hypothesis - previously verified only for the Group of 10 (G-10) countries - that enforcing bank capital asset requirements, exerts a negative effect on the supply of credit. Their econometric analysis o...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/01/1346356/macroeconomic-impact-bank-capital-requirements-emerging-economies-past-evidence-assess-future http://hdl.handle.net/10986/19716 |
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okr-10986-197162021-04-23T14:03:43Z The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future Chiuri, Maria Concetta Ferri, Giovanni Majnoni, Giovanni ACCOUNTING ACCOUNTING PROCEDURES ACCOUNTING STANDARDS ACCOUNTS ASSETS BALANCE SHEET BALANCE SHEETS BANK CAPITAL BANK DEPOSITS BANK LENDING BANK RESTRUCTURING BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BONDS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CAPITALIZATION CAR CENTRAL BANK CORPORATE SECTOR CURRENCY SUBSTITUTION CURRENCY UNITS DEPOSITORS DEPOSITS DOMESTIC CAPITAL MARKETS EMERGING ECONOMIES EMPIRICAL ANALYSES EMPIRICAL ANALYSIS EQUITY INVESTMENTS FEDERAL RESERVE BANK OF BOSTON FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL REGULATION FINANCIAL SECTOR FOREIGN BANKS FOREIGN OWNERSHIP GOVERNMENT SECURITIES INSTITUTIONAL SETUP INTEREST RATES INTERNATIONAL BANKING INTERNATIONAL FINANCIAL STATISTICS ISLAMIC BANKING LEGISLATION LEVEL PLAYING FIELD LIMITED BANKS LIQUIDITY NATIONAL BANKS PROFITABILITY RECESSION REORGANIZATION RISK TAKING SECURITIES SUBSIDIARIES SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SYSTEMIC BANKING CRISES TIER 2 CAPITAL TRANSITION ECONOMIES The authors test for emerging economies, the hypothesis - previously verified only for the Group of 10 (G-10) countries - that enforcing bank capital asset requirements, exerts a negative effect on the supply of credit. Their econometric analysis of data on individual banks, suggests three main results: 1) Enforcement of capital asset requirements - according to the 1998 Basel standard - significantly curtailed credit supply, particularly at less-well-capitalized banks. 2) This negative effect is not limited to countries enforcing capital asset requirements in the aftermath of a currency, or financial crises. 3) The adverse impact of capital requirements on the credit supply was somewhat smaller for foreign-owned banks, suggesting that opening up to foreign investors, may be an effective way to partly shield the domestic banking sector from negative shocks. Overall, by inducing banks to reduce their lending, enforcement of capital asset requirements may well have induced an aggregate slowdown, or contraction in credit in the emerging economies examined. The results have relevance for the ongoing debate on the impact of the revision of bank capital asset requirements, contemplated by the 1999 Basel proposal. They suggest that in several emerging economies, the phasing in of higher capital requirements needs to be carefully managed, to avoid a credit supply retrenchment, which should not be underestimated. 2014-08-26T20:08:55Z 2014-08-26T20:08:55Z 2001-01 http://documents.worldbank.org/curated/en/2001/01/1346356/macroeconomic-impact-bank-capital-requirements-emerging-economies-past-evidence-assess-future http://hdl.handle.net/10986/19716 English en_US Policy Research Working Paper;No. 2605 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ACCOUNTING PROCEDURES ACCOUNTING STANDARDS ACCOUNTS ASSETS BALANCE SHEET BALANCE SHEETS BANK CAPITAL BANK DEPOSITS BANK LENDING BANK RESTRUCTURING BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BONDS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CAPITALIZATION CAR CENTRAL BANK CORPORATE SECTOR CURRENCY SUBSTITUTION CURRENCY UNITS DEPOSITORS DEPOSITS DOMESTIC CAPITAL MARKETS EMERGING ECONOMIES EMPIRICAL ANALYSES EMPIRICAL ANALYSIS EQUITY INVESTMENTS FEDERAL RESERVE BANK OF BOSTON FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL REGULATION FINANCIAL SECTOR FOREIGN BANKS FOREIGN OWNERSHIP GOVERNMENT SECURITIES INSTITUTIONAL SETUP INTEREST RATES INTERNATIONAL BANKING INTERNATIONAL FINANCIAL STATISTICS ISLAMIC BANKING LEGISLATION LEVEL PLAYING FIELD LIMITED BANKS LIQUIDITY NATIONAL BANKS PROFITABILITY RECESSION REORGANIZATION RISK TAKING SECURITIES SUBSIDIARIES SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SYSTEMIC BANKING CRISES TIER 2 CAPITAL TRANSITION ECONOMIES |
| spellingShingle |
ACCOUNTING ACCOUNTING PROCEDURES ACCOUNTING STANDARDS ACCOUNTS ASSETS BALANCE SHEET BALANCE SHEETS BANK CAPITAL BANK DEPOSITS BANK LENDING BANK RESTRUCTURING BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BONDS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CAPITALIZATION CAR CENTRAL BANK CORPORATE SECTOR CURRENCY SUBSTITUTION CURRENCY UNITS DEPOSITORS DEPOSITS DOMESTIC CAPITAL MARKETS EMERGING ECONOMIES EMPIRICAL ANALYSES EMPIRICAL ANALYSIS EQUITY INVESTMENTS FEDERAL RESERVE BANK OF BOSTON FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL REGULATION FINANCIAL SECTOR FOREIGN BANKS FOREIGN OWNERSHIP GOVERNMENT SECURITIES INSTITUTIONAL SETUP INTEREST RATES INTERNATIONAL BANKING INTERNATIONAL FINANCIAL STATISTICS ISLAMIC BANKING LEGISLATION LEVEL PLAYING FIELD LIMITED BANKS LIQUIDITY NATIONAL BANKS PROFITABILITY RECESSION REORGANIZATION RISK TAKING SECURITIES SUBSIDIARIES SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SYSTEMIC BANKING CRISES TIER 2 CAPITAL TRANSITION ECONOMIES Chiuri, Maria Concetta Ferri, Giovanni Majnoni, Giovanni The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future |
| relation |
Policy Research Working Paper;No. 2605 |
| description |
The authors test for emerging economies,
the hypothesis - previously verified only for the Group of
10 (G-10) countries - that enforcing bank capital asset
requirements, exerts a negative effect on the supply of
credit. Their econometric analysis of data on individual
banks, suggests three main results: 1) Enforcement of
capital asset requirements - according to the 1998 Basel
standard - significantly curtailed credit supply,
particularly at less-well-capitalized banks. 2) This
negative effect is not limited to countries enforcing
capital asset requirements in the aftermath of a currency,
or financial crises. 3) The adverse impact of capital
requirements on the credit supply was somewhat smaller for
foreign-owned banks, suggesting that opening up to foreign
investors, may be an effective way to partly shield the
domestic banking sector from negative shocks. Overall, by
inducing banks to reduce their lending, enforcement of
capital asset requirements may well have induced an
aggregate slowdown, or contraction in credit in the emerging
economies examined. The results have relevance for the
ongoing debate on the impact of the revision of bank capital
asset requirements, contemplated by the 1999 Basel proposal.
They suggest that in several emerging economies, the phasing
in of higher capital requirements needs to be carefully
managed, to avoid a credit supply retrenchment, which should
not be underestimated. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Chiuri, Maria Concetta Ferri, Giovanni Majnoni, Giovanni |
| author_facet |
Chiuri, Maria Concetta Ferri, Giovanni Majnoni, Giovanni |
| author_sort |
Chiuri, Maria Concetta |
| title |
The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future |
| title_short |
The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future |
| title_full |
The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future |
| title_fullStr |
The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future |
| title_full_unstemmed |
The Macroeconomic Impact of Bank Capital Requirements in Emerging Economies : Past Evidence to Assess the Future |
| title_sort |
macroeconomic impact of bank capital requirements in emerging economies : past evidence to assess the future |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/01/1346356/macroeconomic-impact-bank-capital-requirements-emerging-economies-past-evidence-assess-future http://hdl.handle.net/10986/19716 |
| _version_ |
1764440204801736704 |