Whenever financial regulators propose to impose new capital requirements on banks, their chieftains and lobbyists warn that such moves would slow lending and hurt the economy. When the Federal Reserve and other U.S. regulators decided in July 2013 to require the nations eight biggest banks to hold twice as much equity capital as their foreign counterparts, for example, the head of the Financial Services Roundtable warned that the rule will make it harder for banks to lend and keep the economic recovery going. Weve pointed out before that historical as well as theoretical research suggests otherwise. Now a little-noted study of 102 large global banks by the Bank for International Settlements, a Basel-based institution that advises central banks, shows that lending has expanded at banks in both advanced economies and emerging markets even as capital requirements and ratios have risen since the financial crisis, though not so much in Europe. ...
Posted on: Wed, 17 Dec 2014 17:44:10 +0000
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