Year: 2012
Type: article
Abstract: This article reports estimates of the long‐run costs and benefits of having banks fund more of their assets with loss‐absorbing capital, or equity. We model how shifts in funding affect required rates of return and how costs are influenced by the tax system. We draw a clear distinction between costs to individual institutions (private costs) and overall economic (or social) costs. We find that the amount of equity capital that is likely to be desirable for banks to use is very much larger than banks have used in recent years and also higher than targets agreed under the Basel III framework.
Source: The Economic Journal
Authors: David Miles, Jing Yang, Gilberto Marcheggiano
Institutions: Bank of England, Bank for International Settlements
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2153678347