We survey 149 leading academic researchers on bank capital regulation.
The median (average) respondent prefers a 10% (15%) minimum
non-risk-weighted equity-to-assets ratio, which is considerably higher
than the current requirement. North Americans prefer a significantly
higher equity-to-assets ratio than Europeans. We find substantial
support for the new forms of regulation introduced in Basel III, such as
liquidity requirements. Views are most dispersed regarding the use of
hybrid assets and bail-inable debt in capital regulation. 70% of experts
would support an additional market-based capital requirement. When
investigating factors driving capital requirement preferences, we find
that the typical expert believes a five percentage points increase in
capital requirements would “probably decrease” both the likelihood and
social cost of a crisis with “minimal to no change” to loan volumes and
economic activity. The best predictor of capital requirement preference
is how strongly an expert believes that higher capital requirements
would increase the cost of bank lending.