Basel III and Bank-Lending: Evidence from the United States and Europe

By Sami Ben Naceur, Jérémy Pépy, Caroline Roulet

November 15, 2017

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Sami Ben Naceur, Jérémy Pépy, and Caroline Roulet. Basel III and Bank-Lending: Evidence from the United States and Europe, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using data on commercial banks in the United States and Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank-lending following the 2008 financial crisis. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.

Subject: Asset and liability management, Banking, Basel III, Capital adequacy requirements, Credit, Financial institutions, Financial regulation and supervision, Global financial crisis of 2008-2009, Liquidity management, Loans, Money

Keywords: Bank regulatory capital, Bank risk appetite, Banking regulation, Basel III, Capital adequacy requirements, Credit, Credit crunch, Determinants of bank-lending, Europe, European bank, Financial crisis, Global, Introduced bank capital regulation, Lending supply, Leverage ratio, Liquidity management, Liquidity requirements, Loans, U.S. bank, WP

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/245
Stock No:

WPIEA2017245
ISBN:

9781484328309
ISSN:

1018-5941

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