Nijolė Valinskytė, Erika Ivanauskaitė, Darius Kulikauskas, Simonas Krėpšta, 12 April 2018

The leverage ratio requirement should supplement microprudential the risk-based capital requirements framework to serve as a backstop that ensures sufficient levels of equity in banks. However, the 3% level for this ratio should not be treated as the end-goal, as recent research on optimal capital levels points to substantially higher leverage ratios. This column examines the relationship between risk-based and leverage ratio requirements, and the motivation for the macroprudential use of leverage ratio requirements.

Pierluigi Bologna, Arianna Miglietta, Marianna Caccavaio, 14 October 2014

Following the financial crisis, European banks have taken steps to revise unsustainable business models by deleveraging. By this metric they have made substantial progress – but this column argues that improper management of the deleveraging process may threaten the recovery. The authors find that equity increases played a much larger role than asset decreases, and recommend increasing the disposal of bad assets.

Lars Frisell, 07 November 2012

Measuring financial risk is difficult. But what lessons, if any, have we learnt from the current crisis? This column argues against a move to leverage ratios and instead proposes continuing to measure financial risk (despite the difficulties), but with higher capital charges for banks. Focusing on the basics can only bolster central banks’ ability to fulfil their duties – looking for imbalances, and promptly tackling them with informed decisions.

Events

  • 17 - 18 August 2019 / Peking University, Beijing / Chinese University of Hong Kong – Tsinghua University Joint Research Center for Chinese Economy, the Institute for Emerging Market Studies at Hong Kong University of Science and Technology, the Guanghua School of Management at Peking University, the Stanford Center on Global Poverty and Development at Stanford University, the School of Economics and Management at Tsinghua University, BREAD, NBER and CEPR
  • 19 - 20 August 2019 / Vienna, Palais Coburg / WU Research Institute for Capital Markets (ISK)
  • 29 - 30 August 2019 / Galatina, Italy /
  • 4 - 5 September 2019 / Roma Eventi, Congress Center, Pontificia Università Gregoriana Piazza della Pilotta, 4, Rome, Italy / European Center of Sustainable Development , CIT University
  • 9 - 14 September 2019 / Guildford, Surrey, UK / The University of Surrey

CEPR Policy Research