Benefits and costs of a higher bank “leverage ratio”

@article{Barth2018BenefitsAC,
  title={Benefits and costs of a higher bank “leverage ratio”},
  author={J. Barth and S. Miller},
  journal={Journal of Financial Stability},
  year={2018},
  volume={38},
  pages={37-52}
}
  • J. Barth, S. Miller
  • Published 2018
  • Economics
  • Journal of Financial Stability
  • This study reports estimates of the marginal benefits and costs of increasing the regulatory minimum bank equity-to-asset “leverage ratio” from 4 to 15 percent. Benefits arise from reducing the probability of a banking crisis. Costs arise from reduced lending, should banks pass off higher equity costs onto borrowers. Net benefits increase with a higher discount rate, a smaller tax advantage of debt, a lower non-financial corporate debt-to-capital ratio, a higher cost of crises, a longer… CONTINUE READING
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