regulatory framework. In addition, we argue that banking-on-the-average rules ensure the build-up of bank equity capitals in … system, we show that a banking-on-the-average framework can deliver the socially optimal solution because it induces banks to …

regulatory framework. In addition, we argue that banking-on-the-average rules ensure the build-up of bank equity capitals in … system, we show that a banking-on-the-average framework can deliver the socially optimal solution because it induces banks to …

In this paper, we introduce a new requirement for bank capital: banking-on-the-average rules. Under these rules a bank … illustrate the workings of banking-on-the-average rules. We show that in booms these rules can prevent banks from taking … on other banks. In addition, banking-on-the-average rules ensure the build-up of bank equity capital in booms and thus …

regulatory framework. In addition, we argue that banking-on-the-average rules ensure the build-up of bank equity capitals in … system, we show that a banking-on-the-average framework can deliver the socially optimal solution because it induces banks to …