BoE studies effects of capital requirements on balance sheets
After the financial crisis, banks placed more emphasis on asset deleveraging
After the financial crisis, banks in the UK placed more emphasis on overall asset deleveraging, reducing lending to meet capital requirements, a working paper published by the Bank of England has shown.
Using a database of individual UK capital requirements spanning 1989 to 2013, and panel regression techniques, Sebastian de-Ramon, William Francis and Qun Harris evaluate whether the effects of capital requirements on banks' balance sheet adjustments changed after the 2008–09 financial crisis.
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