Document details

Is the Basel III Leverage Ratio countercyclical? A study for Portuguese banks

Author(s): Batista, Dina Raquel Pereira

Date: 2015

Persistent ID: http://hdl.handle.net/10362/15593

Origin: Repositório Institucional da UNL

Subject(s): Banks; Leverage; Regulation; Pro-cyclicality; Domínio/Área Científica::Ciências Sociais::Economia e Gestão; Domínio/Área Científica::Ciências Sociais::Economia e Gestão; Domínio/Área Científica::Ciências Sociais::Economia e Gestão


Description

This work analyses how the leverage ratio behaves through the cycle, vis-à-vis other capital ratios. For a sample of the largest Portuguese banks, the Basel III leverage ratio is indeed countercyclical. This result is relevant from a regulatory perspective, since the introduction of a limit on the leverage ratio will function as a restriction in the banks’ balance sheet size, reducing the economic costs associated with the excessive growth of leverage in periods of economic expansion followed by aggressive deleveraging in the downturn. However, one cannot exclude that restrictions on banks’ leverage incentivize its transference to less regulated intermediaries.

Document Type Master thesis
Language English
Advisor(s) Pinho, Paulo
Contributor(s) Batista, Dina Raquel Pereira
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