Hidden Bibliographic Details
| Other authors / contributors: | Kumhof, Michael, author.
International Monetary Fund. Research Department, issuing body.
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| ISBN: | 1283570351
9781283570350
9781455294657
1455294659
1455296678
9781455296675
9786613882806
6613882801
145529263X
9781455292639
9781455259359
1455259357
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| Notes: | Includes bibliographical references.
English.
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| Summary: | We study the welfare properties of a New Keynesian monetary economy with an essential role for risky bank lending. Banks lend funds deposited by households to a financial accelerator sector, and face penalties for maintaining insufficient net worth. The loan contract specifies an unconditional lending rate, which implies that banks can make loan losses. Their main response is to raise lending rates to rebuild net worth. Prudential rules that adjust minimum capital adequacy requirements in response to loan losses significantly increase welfare. But the gains from eliminating limited liability and moral hazard would be an order of magnitude larger.
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| Other form: | Print version: Benes, Jaromir. Risky Bank Lending and Optimal Capital Adequacy Regulation. Washington : International Monetary Fund, ©2011 9781455259359
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