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Basel III and Bank-Lending: Evidence from the United States and Europe

Author

Listed:
  • Sami Ben Naceur
  • Jérémy Pépy
  • Caroline Roulet
Abstract
Using data on commercial banks in the United States and Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank-lending following the 2008 financial crisis. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.

Suggested Citation

  • Sami Ben Naceur & Jérémy Pépy & Caroline Roulet, 2017. "Basel III and Bank-Lending: Evidence from the United States and Europe," IMF Working Papers 2017/245, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/245
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    More about this item

    Keywords

    WP; financial crisis; leverage ratio; U.S. bank; credit crunch; European bank; lending supply; bank regulatory capital; liquidity requirements; banking regulation; bank risk appetite; introduced bank capital regulation; determinants of bank-lending; Loans; Capital adequacy requirements; Basel III; Liquidity management; Credit; Europe; Global;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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