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 resorti...

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Bibliographic Details
Main Author: Dagher, Jihad
Other Authors: Dell'Ariccia, Giovanni, Laeven, Luc, Ratnovski, Lev
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2016.
Series:Staff Discussion Notes; Staff Discussion Notes ; No. 2016/004
Online Access:Full text available on IMF
Description
Summary: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.
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Physical Description:1 online resource (38 pages)
Format:Mode of access: Internet
ISSN:2617-6750
Access:Electronic access restricted to authorized BRAC University faculty, staff and students