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.
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| Ministère/Organisme | Bank of Canada, issuing body. |
|---|---|
| Titre | Should banks be worried about dividend restrictions? / by Josef Schroth. |
| Titre de la série | Staff working paper = Document de travail du personnel, 1701-9397 ; 2023-49 |
| Type de publication | Série - Voir l'enregistrement principal |
| Langue | [Anglais] |
| Format | Électronique |
| Document électronique | |
| Note(s) | "September 27, 2023." Cover title. Includes bibliographical references (pages 21-23). Includes abstracts in English and French. |
| Information sur la publication | [Ottawa] : Bank of Canada = Banque du Canada, 2023. ©2023 |
| Auteur / Contributeur | Schroth, Josef, author. |
| Description | 1 online resource (24 pages) : graphs. |
| Numéro de catalogue |
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| Descripteurs | Dividend reinvestment. Business cycles -- Econometric models. Financial risk management. Dividendes -- Réinvestissement. Cycles économiques -- Modèles économétriques. Finances -- Gestion du risque. |
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