Working Paper

Bank Capital Regulations Around the World : What Explains the Differences?

Abstract: Despite the extensive attention that the Basel capital adequacy standards have received internationally, significant variation exists in the implementation of these standards across countries. Furthermore, a significant number of countries increase or decrease the stringency of capital regulations over time. The paper investigates the empirical determinants of the variation in the data based on the theories of bank capital regulation. The results show that countries with high average returns to investment and a high ratio of government ownership of banks choose less stringent capital regulation standards. Capital regulations may also be less stringent in countries with more concentrated banking sectors.

Keywords: Capital Requirements; Basel Capital Accord; Financial regulation; International policy coordination;

JEL Classification: G21; G28; F33;

https://doi.org/10.17016/FEDS.2016.057

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2016-07

Number: 2016-057

Pages: 40 pages