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Procyclicality, Bank Lending, and the Macroeconomic Implications of a Revised Basel Accord
Author(s) -
Jacques Kevin T.
Publication year - 2010
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.2010.00278.x
Subject(s) - basel iii , risk weighted asset , capital requirement , basel ii , basel i , business cycle , economics , monetary economics , bank regulation , stock (firearms) , financial system , capital adequacy ratio , capital (architecture) , business , macroeconomics , capital formation , financial capital , microeconomics , engineering , human capital , market economy , mechanical engineering , profit (economics) , history , archaeology , incentive
Bank regulators are in the process of implementing revised regulatory capital standards. However, the macroeconomic effects of a revised Basel Accord are uncertain. Examining the various channels through which the revised Accord may influence economic output suggests that making the buffer stock of capital positively related to the business cycle is necessary to reduce procyclicality. This can be accomplished by bank regulators using either enhanced supervisory powers or increased financial disclosure.