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Optimal equity capital requirements for large Swiss banks
- Source :
- Swiss Journal of Economics and Statistics, Vol 154, Iss 1, Pp 1-21 (2018)
- Publication Year :
- 2018
- Publisher :
- SpringerOpen, 2018.
-
Abstract
- Abstract Ten years after the worst financial crisis of the post-war period, Switzerland has established a Too-Big-To-Fail (TBTF) framework. Under this framework, the two large Swiss banks are subject to substantial capital requirements. It is not obvious whether the TBTF capital requirements are sufficient to prevent banks from plunging the country into a financial crisis once again. We estimate the social costs and benefits of higher capital requirements for the two large Swiss banks and derive socially optimal capital ratios from the cost-benefit trade-off. Our results show that Swiss TBTF capital requirements still fall short of socially optimal capital ratios.
Details
- Language :
- English
- ISSN :
- 22356282
- Volume :
- 154
- Issue :
- 1
- Database :
- Directory of Open Access Journals
- Journal :
- Swiss Journal of Economics and Statistics
- Publication Type :
- Academic Journal
- Accession number :
- edsdoj.2450b967a4549eb8a7f8fe055ef9c98
- Document Type :
- article
- Full Text :
- https://doi.org/10.1186/s41937-018-0025-z