International Prudential Regulation, Regulatory Risk and Cost of Bank Capital
We define regulatory risk as regulation that leads to an increase in the cost of capital for a regulated firm. In a general equilibrium setting, scholars have shown that uniform increases in capital requirements lead to an increase in the cost of capital. We extend their model to show that when regu...
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| Format: | Article |
| Language: | English |
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Universiti Utara Malaysia
2007
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| Online Access: | https://repo.uum.edu.my/id/eprint/25098/1/IJBF%205%201%202007%2027%2058.pdf |
| _version_ | 1825805222520291328 |
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| author | Ngo, Phong T. H. |
| author_facet | Ngo, Phong T. H. |
| author_sort | Ngo, Phong T. H. |
| collection | UUM |
| description | We define regulatory risk as regulation that leads to an increase in the cost of capital for a regulated firm. In a general equilibrium setting, scholars have shown that uniform increases in capital requirements lead to an increase in the cost of capital. We extend their model to show that when regulatory standards differ across countries, financial integration leads to positive spillovers that reduce the cost of capital mark up for a given increase in bank capital. Accordingly, regulatory risk may be greater under a regulatory agreement such as the Basel Accord, which imposes international uniformity in capital ratios. |
| first_indexed | 2024-07-04T06:28:46Z |
| format | Article |
| id | uum-25098 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:28:46Z |
| publishDate | 2007 |
| publisher | Universiti Utara Malaysia |
| record_format | eprints |
| spelling | uum-250982018-10-31T01:08:09Z https://repo.uum.edu.my/id/eprint/25098/ International Prudential Regulation, Regulatory Risk and Cost of Bank Capital Ngo, Phong T. H. HG Finance We define regulatory risk as regulation that leads to an increase in the cost of capital for a regulated firm. In a general equilibrium setting, scholars have shown that uniform increases in capital requirements lead to an increase in the cost of capital. We extend their model to show that when regulatory standards differ across countries, financial integration leads to positive spillovers that reduce the cost of capital mark up for a given increase in bank capital. Accordingly, regulatory risk may be greater under a regulatory agreement such as the Basel Accord, which imposes international uniformity in capital ratios. Universiti Utara Malaysia 2007 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/25098/1/IJBF%205%201%202007%2027%2058.pdf Ngo, Phong T. H. (2007) International Prudential Regulation, Regulatory Risk and Cost of Bank Capital. The International Journal of Banking and Finance, 5 (1). pp. 27-58. ISSN 1617-722 http://ijbf.uum.edu.my/index.php/previous-issues/135-the-international-journal-of-banking-and-finance-ijbf-vol-5-no-1-2008 |
| spellingShingle | HG Finance Ngo, Phong T. H. International Prudential Regulation, Regulatory Risk and Cost of Bank Capital |
| title | International Prudential Regulation, Regulatory Risk and Cost of Bank Capital |
| title_full | International Prudential Regulation, Regulatory Risk and Cost of Bank Capital |
| title_fullStr | International Prudential Regulation, Regulatory Risk and Cost of Bank Capital |
| title_full_unstemmed | International Prudential Regulation, Regulatory Risk and Cost of Bank Capital |
| title_short | International Prudential Regulation, Regulatory Risk and Cost of Bank Capital |
| title_sort | international prudential regulation regulatory risk and cost of bank capital |
| topic | HG Finance |
| url | https://repo.uum.edu.my/id/eprint/25098/1/IJBF%205%201%202007%2027%2058.pdf |
| work_keys_str_mv | AT ngophongth internationalprudentialregulationregulatoryriskandcostofbankcapital |