Tighter US capital ratios eased inequality – Bundesbank paper
Richer households’ incomes fell while Fed’s easing cushioned effects on middle and low earners
US regulatory authorities reduced inequality when they increased banks’ capital requirements, a working paper published by the Deutsche Bundesbank finds.
In Effects of bank capital requirement tightenings on inequality, Sandra Eickmeier, Benedikt Kolb and Esteban Prieto examine US data from between 1980 and 2008.
The three authors draw on some of their earlier research, published by the Bundesbank last year, and identify six times when “a large share of US banks raised their capital ratios
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