In the advanced economies, financial regulators have targeted capital ratios as an effective tool for averting financial contagion and mitigating its negative impacts. As a result, officials have promulgated banking capital and leverage rules with substantially higher thresholds since the 2008 crisis. But economists Òscar Jordà, Björn Richter, Moritz Schularick and Alan M. Taylor push back on this reasoning by compiling a historical record of data to understand whether such measures can prevent credit shockwaves. getAbstract recommends this powerful report to finance professionals for its deep dive into the intricacies of financial sector engineering.
In this summary, you will learn
- Why banking regulators have turned to capital ratio controls to avert credit crises,
- What empirical data reveal about this policy choice and
- Why other banking metrics may be more accurate as predictive tools.
About the Authors
Òscar Jordà is an economist at the Federal Reserve Bank of San Francisco. Björn Richter and Moritz Schularick are economics professors at the University of Bonn. Alan M. Taylor is an economics professor at the University of California, Davis.
Get the key points from this article in 10 minutes.
For your company
We help you build a culture of continuous learning.
Comment on this summary
By the same authors
Oscar Jorda et al.
Customers who read this summary also read
Gazi Ishak Kara
Federal Reserve Board, 2016
Jihad Dagher et al.
Finance & Development Magazine, 2016
W.W. Norton, 2014
Federal Reserve Bank of Atlanta, 2016