TY - JOUR TI - The cross-border effects of bank capital regulation SN - 0304-405X Y1 - 2024/10// AV - restricted N2 - We study the international coordination of bank capital requirements under a host-country rule: the requirement depends on where the borrower, not the bank, is located. In such a regime, countries compete for scarce bank equity capital. Raising a country?s requirement may generate bank capital outflows as well as inflows. We pin down the condition for the sign of the capital flow and the associated externality, and highlight the policy implications. Absent collaboration, overshooting is likely: individual countries have an incentive to increase Basel III?s Counter-Cyclical Capital Buffer too much in good times and cut it too much in bad times. UR - https://doi.org/10.1016/j.jfineco.2024.103912 ID - discovery10189190 N1 - This version is the author accepted manuscript. For information on re-use, please refer to the publisher?s terms and conditions. VL - 160 KW - CCyB; International coordination; Race to the bottom; Race to the top; Liquidity services A1 - Bahaj, Saleem A1 - Malherbe, Frederic PB - Elsevier JF - Journal of Financial Economics ER -