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Assessing the impact of Basel III on bank behaviour: A micro-founded approach

Abstract : The failures of the banking sector to promote sustainable lending and to build strong capital and liquidity buffers prior to the 2008 Financial Crisis addressed the rationale for implementing the banking regulatory regime Basel III. In this paper, we question the fundamental role of this new regulatory regime in promoting bank lending and ensuring the adequate funding structure of the banking sector regarding the introduction of unprecedented international liquidity standards notably. We build a theoretical model of bank behaviour under a regulatory regime à la Basel III which points to two major results. First, Regulatory Authorities need to define the objectives and thus, the underlying tools implemented in order to achieve the optimum-optimurum. Second, we show that the competitive structure of the markets the bank faces is a determinant to take into account for achieving this optimum-optimurum.
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Submitted on : Thursday, July 19, 2018 - 3:39:25 PM
Last modification on : Wednesday, March 4, 2020 - 12:14:04 PM
Long-term archiving on: : Saturday, October 20, 2018 - 4:45:52 PM


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  • HAL Id : halshs-01844661, version 1


Jérémy Pépy, Benjamin Williams. Assessing the impact of Basel III on bank behaviour: A micro-founded approach. 2018. ⟨halshs-01844661⟩



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