BIS releases paper studying the impact of bank liquidity regulation on private credit growth.

The Bank for International Settlements (BIS) released a working paper examining the role of liquidity coverage ratio (LCR) regulation for large U.S. banks in driving growth in the private credit market. The paper analyzes the LCR regulatory requirements implemented for large banks in the United States. Estimates show that for each one-standard-deviation increase in a county's ex-ante coverage by LCR-regulated banks, the scale of local private credit after the LCR took effect was nearly 50% higher. The economic impact of the LCR on private credit growth is comparable to the impact of higher capital requirements resulting from the 2012 Comprehensive Capital Analysis and Review (CCAR) stress tests. The paper explicitly states that related follow-up questions assessing this regulatory impact are outside the scope of this study.

AI-generated from reports · 3 hr agoUpdated

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