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Capital Regulation, Liquidity Requirements and Taxation in a Dynamic Model of Banking, Gianni De Nicolo, Andrea Gamba, Marcella Lucchetta

This paper studies the impact of bank regulation and taxation in a dynamic model with banks exposed to credit and liquidity risk. We find an inverted U-shaped relationship between capital requirements and bank lending, efficiency, and welfare, with their benefits turning into costs beyond a certain requirement threshold. By contrast, liquidity requirements reduce lending, efficiency and welfare significantly. The costs of high capital and liquidity requirements represent a lower bound on the benefits of these regulations in abating systemic risks. On taxation, corporate income taxes generate higher government revenues and entail lower efficiency and welfare costs than taxes on non-deposit liabilities.
Table Of Contents
Cover; Capital Regulation, Liquidity Requirements and Taxation in a Dynamic Model of Banking; Abstract; I. Introduction; II. A brief literature review; III. The model; A. Bank's balance sheet; B. Bank's cash flow; C. The unregulated bank program and the valuation of securities; D. Efficiency and welfare metrics; IV. Bank regulation; A. Capital requirement; B. Liquidity requirement; C. Bank regulation in a simplified version of the model; V. The impact of bank regulation and taxation; A. Calibration; B. State-dependent analysis; C. Steady state analysis; C.1. The impact of bank regulation
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (55 p.)
Specific Material Designation
Form Of Item

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