Marginal cost of risk-based capital and risk-taking

We explore the impact of capital adequacy requirements on financial institutions’ risk-taking behavior from a novel perspective. Specifically, we show that an important feature of the risk-based capital (RBC) system—a built-in diversification benefit in aggregating risk categories—induces moral haza...

Full description

Bibliographic Details
Main Authors: Chen, Tao, Goh, Jing Rong, Kamiya, Shinichi, Lou, Pingyi
Other Authors: Nanyang Business School
Format: Journal Article
Language:English
Published: 2020
Subjects:
Online Access:https://hdl.handle.net/10356/143660