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Basel III: Effects of capital and liquidity regulations on European bank lending

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  • Roulet, Caroline

Abstract

Using data on commercial banks in Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank lending following the 2008 financial crisis. On the whole, capital ratios have significant and negative impacts on large European bank-retail-and-other-lending-growth in a context of deleveraging and “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 behaviours when implementing new regulatory policies.

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  • Roulet, Caroline, 2018. "Basel III: Effects of capital and liquidity regulations on European bank lending," Journal of Economics and Business, Elsevier, vol. 95(C), pages 26-46.
    • Handle: RePEc:eee:jebusi:v:95:y:2018:i:c:p:26-46
    DOI: 10.1016/j.jeconbus.2017.10.001
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    More about this item

    Keywords

    Lending supply; Bank regulatory capital; Liquidity requirements; Banking regulation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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