Bank Capital Regulation with Asymmetric Countries

12 Pages Posted: 4 Mar 2015

See all articles by Damien Eldridge

Damien Eldridge

La Trobe University School of Economics

Heajin Ryoo

University of Southern California - Department of Economics

Axel Wieneke

La Trobe University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2015

Abstract

When financial markets are global, the impacts of national banking regulations extend beyond national borders. While lax regulatory enforcement improves the profitability of home banks, it also increases loan supply, which in turn reduces the global interest rate spreads. In a two‐country model we show that each regulator's enforcement choice is affected by the relative size of the national financial market. An authority regulating a smaller market has a smaller impact on global interest rates and therefore a stronger incentive to relax regulatory enforcement.

Suggested Citation

Eldridge, Damien Sean and Ryoo, Heajin and Wieneke, Axel, Bank Capital Regulation with Asymmetric Countries (March 2015). Economic Record, Vol. 91, Issue 292, pp. 79-90, 2015. Available at SSRN: https://ssrn.com/abstract=2573325 or http://dx.doi.org/10.1111/1475-4932.12152

Damien Sean Eldridge (Contact Author)

La Trobe University School of Economics ( email )

School of Economics
La Trobe University
Melbourne, Victoria, 3086
Australia

HOME PAGE: http://www.latrobe.edu.au/economics/about/staff/profile?uname=deldridge

Heajin Ryoo

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

Axel Wieneke

La Trobe University ( email )

La Trobe University
School of Economics
Bendigo, 3552
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
173
PlumX Metrics