TY  - BOOK
AU  - Gorton,Gary
AU  - Winton,Andrew
ED  - National Bureau of Economic Research.
TI  - Bank Capital Regulation in General Equilibrium
T2  - NBER working paper series
PY  - 1995///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - August 1995; Hardcopy version available to institutional subscribers
N2  - We study whether the socially optimal level of stability of the banking system can be implemented with regulatory capital requirements in a multi-period general equilibrium model of banking.  We show that: (i) bank capital is costly because of the unique liquidity services provided by demand deposits, so a bank regulator may optimally choose to have a risky banking system; (ii) even if the regulator prefers more capital in the system, the regulator is constrained by the private cost of bank capital, which determines whether bank shareholders will agree to meet capital requirements rather than exit the industry
UR  - https://www.nber.org/papers/w5244
UR  - http://dx.doi.org/10.3386/w5244
ER  -