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Net Stable Funding Requirement under Basel III: Loan Portfolio Growth Matters

Net Stable Funding Requirement under Basel III: Loan Portfolio Growth Matters This paper evaluates the perceived stability‐enhancing role of the net stable funding ratio (NSFR) requirement under Basel III and its impact on the balance sheets of banks. Using data from 647 banks located in 47 countries from 2003 to 2013, we find that the NSFR would have played a financial stability‐enhancing role if it had been implemented during the sample period. However, the NSFR requirement would also have had a loan portfolio shrinkage affect and increases the possibility of sub‐optimal loan portfolio selection. Our results suggest that there are costs and benefits to implementing the NSFR requirement. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Financial Studies Wiley

Net Stable Funding Requirement under Basel III: Loan Portfolio Growth Matters

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Publisher
Wiley
Copyright
Copyright © 2018 Korean Securities Association
ISSN
2041-9945
eISSN
2041-6156
DOI
10.1111/ajfs.12221
Publisher site
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Abstract

This paper evaluates the perceived stability‐enhancing role of the net stable funding ratio (NSFR) requirement under Basel III and its impact on the balance sheets of banks. Using data from 647 banks located in 47 countries from 2003 to 2013, we find that the NSFR would have played a financial stability‐enhancing role if it had been implemented during the sample period. However, the NSFR requirement would also have had a loan portfolio shrinkage affect and increases the possibility of sub‐optimal loan portfolio selection. Our results suggest that there are costs and benefits to implementing the NSFR requirement.

Journal

Asia-Pacific Journal of Financial Studies – Wiley

Published: Jan 1, 2018

Keywords: ; ; ;

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