eprintid: 10189190
rev_number: 11
eprint_status: archive
userid: 699
dir: disk0/10/18/91/90
datestamp: 2024-03-15 09:59:00
lastmod: 2024-08-12 10:51:52
status_changed: 2024-03-15 09:59:00
type: article
metadata_visibility: show
sword_depositor: 699
creators_name: Bahaj, Saleem
creators_name: Malherbe, Frederic
title: The cross-border effects of bank capital regulation
ispublished: pub
divisions: UCL
divisions: B04
divisions: C05
divisions: F49
keywords: CCyB; International coordination; 
Race to the bottom; Race to the top; 
Liquidity services
note: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
abstract: 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.
date: 2024-10
date_type: published
publisher: Elsevier
official_url: https://doi.org/10.1016/j.jfineco.2024.103912
full_text_type: other
language: eng
verified: verified_manual
elements_id: 2258065
doi: 10.1016/j.jfineco.2024.103912
lyricists_name: Malherbe, Frederic
lyricists_id: FMALH20
actors_name: Malherbe, Frederic
actors_id: FMALH20
actors_role: owner
full_text_status: restricted
publication: Journal of Financial Economics
volume: 160
article_number: 103912
issn: 0304-405X
citation:        Bahaj, Saleem;    Malherbe, Frederic;      (2024)    The cross-border effects of bank capital regulation.                   Journal of Financial Economics , 160     , Article 103912.  10.1016/j.jfineco.2024.103912 <https://doi.org/10.1016/j.jfineco.2024.103912>.      
 
document_url: https://discovery.ucl.ac.uk/id/eprint/10189190/1/CBE.pdf