Federal Reserve Bank of Cleveland: How Do Banks Respond to Capital Regulation? — The Impact of the Basel III Reforms in the United States

Image of article on FRB of Cleveland site.

Research suggests costs of higher capital requirements are quickly felt because financial market participants respond to new information about regulatory changes as soon as they are announced. Study documents that in the case of the implementation of Basel III, banks began to increase their capital ratios “prior to the publication of the specific language applicable to US banks.

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