Why be Afraid of Higher Bank Capital Requirements?


There is much debate, and resistance from the banking sector, about the merits of higher required bank capital ratios. Both in theory and in practice there is little reason to justify such concern.

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This paper was prepared by Professor Kevin Davis, Research Director of the Australian Centre for Financial Studies,.

The ACFS Financial Regulation Discussion Paper series provides independent analysis and commentary on current issues in financial regulation with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation.

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