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| Author: | Chiuri, M. C. Ferri, G. Majnoni, G. |
| Title: | The macroeconomic impact of bank capital requirements in emerging economies: Past evidence to assess the future |
| Journal: | Journal of Banking and Finance
2002 : MAY, VOL. 26:5, p. 881-904 |
| Index terms: | BANKS CAPITAL INVESTMENT SOLVENCY |
| Language: | eng |
| Abstract: | The authors test for emerging economies the hypothesis - previously verified for G-10 countries only -that the enforcement of bank capital asset requirements (CARs) curtails the supply of credit. The econometric analysis on individual bank data suggests three main results. First, CAR enforcement significantly trimmed credit supply, particularly at less-well capitalized banks. Second, the negative impact has been larger for countries enforcing CARs in the aftermath of a currency/financial crisis. Third, the adverse impact of CARs has been somewhat smaller for foreign-owned banks, suggesting that opening up to foreign investors may have partly shielded the domestic banking sector from negative shocks. |
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