Should banks be worried about dividend restrictions? / by Josef Schroth. : FB3-5/2023-49E-PDF

"In the model in this paper, banks are rationally forward-looking and thus ignore short-lived reductions in capital requirements. During a financial crisis, a regulator would want to first impose drastic dividend restrictions to force banks to rebuild capital, but also would want to keep capital requirements low for a sufficiently long time afterwards. However, such a policy is not time-consistent. Once banks are sufficiently re-capitalized, the regulator would be tempted to immediately raise capital requirements all the way to pre-crisis levels. Optimal time-consistent capital regulation requires that bank capital is rebuilt gradually during financial crises. In particular, banks must be able to pay dividends even when bank equity is still significantly below pre-crisis levels"--Abstract, page 2.

Lien permanent pour cette publication :
publications.gc.ca/pub?id=9.927890&sl=1

• Format MARC XML
• Format MARC HTML

Demander des formats alternatifs