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Bank Capital Regulations Around the World : What Explains the Differences?

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Abstract

Despite the extensive attention that the Basel capital adequacy standards have received internationally, significant variation exists in the implementation of these standards across countries. Furthermore, a significant number of countries increase or decrease the stringency of capital regulations over time. The paper investigates the empirical determinants of the variation in the data based on the theories of bank capital regulation. The results show that countries with high average returns to investment and a high ratio of government ownership of banks choose less stringent capital regulation standards. Capital regulations may also be less stringent in countries with more concentrated banking sectors.

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  • Gazi I. Kara, 2016. "Bank Capital Regulations Around the World : What Explains the Differences?," Finance and Economics Discussion Series 2016-057, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2016-57
    DOI: 10.17016/FEDS.2016.057
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    Cited by:

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    2. Downing, Jeff, 2019. "Accounting standards and banking regulation: Some effects of divergence," Research in International Business and Finance, Elsevier, vol. 47(C), pages 386-397.
    3. Boubakri, Narjess & Cao, Zhongyu & El Ghoul, Sadok & Guedhami, Omrane & Li, Xinming, 2023. "National culture and bank liquidity creation," Journal of Financial Stability, Elsevier, vol. 64(C).
    4. Kara, Gazi Ishak, 2016. "Systemic risk, international regulation, and the limits of coordination," Journal of International Economics, Elsevier, vol. 99(C), pages 192-222.
    5. Avdjiev, Stefan & Aysun, Uluc & Hepp, Ralf, 2019. "What drives local lending by global banks?," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 54-75.
    6. Nassios, Jason & Giesecke, James A. & Dixon, Peter B. & Rimmer, Maureen T., 2020. "What impact do differences in financial structure have on the macro effects of bank capital requirements in the United States and Australia?," Economic Modelling, Elsevier, vol. 87(C), pages 429-446.

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    More about this item

    Keywords

    Capital Requirements; Basel Capital Accord; Financial regulation; International policy coordination;
    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
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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