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Capital Requirements and Financial Problems with the Macroeconomy |
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| รหัสดีโอไอ | |
| Creator | Bowornlux Kaewtun |
| Title | Capital Requirements and Financial Problems with the Macroeconomy |
| Publisher | Faculty of Economics, Chulalongkorn University |
| Publication Year | 2559 |
| Journal Title | Southeast Asian Journal of Economics |
| Journal Vol. | 4 |
| Journal No. | 1 |
| Page no. | 1 27 |
| Keyword | Capital requirements, financial problems, macroeconomic model |
| URL Website | http://www.econ.chula.ac.th/public/publication/journal/sajehome.php |
| Website title | Southeast Asian Journal of Economics |
| ISSN | 2465-5120 |
| Abstract | The 2008 financial crisis has revitalized policymakers to find an appropriate policy to respond to recurring financial problem. The purpose of this paper is to investigate the impacts of capital requirements in response to shocks and to find out how capital requirements work in reducing financial problems and stabilizing balance sheets. We consider a macroeconomic model with a banking sector that is allowed to borrow funds from the international and domestic markets. The results show that capital requirements are efficient in responding to financial problems. It increases the bank's net worth and reduces its leverage ratio. A less aggressive policy produces lower losses and stabilizes the variation of net worth and bank leverage. But a high degree of responsiveness is required if authorities aim to accelerate net worth accumulation and overcome a banking crisis. However, capital requirements are less effective in responding to technology shocks. Capital requirements cannot fully stabilize net worth and balance sheets. |
