CEU Electronic Theses and Dissertations, 2025
| Author | Mamyrbekova, Madina |
|---|---|
| Title | How do key Basel III components impact bank lending across countries? |
| Summary | The Global Financial Crisis of 2007–2008 revealed critical shortcomings in banking regulation, including underestimated risks and rapid credit growth. In response, the Basel Committee introduced Basel III to enhance bank resilience and improve consistency, comparability, and transparency through stricter capital and liquidity requirements. This thesis examines whether such reforms constrain bank lending to the private sector, using a panel dataset of 28 countries from 2011 Q1 to 2024 Q3 and focusing on seven core Basel III components: Standardized Approach for Credit Risk, Internal Ratings-Based Approach, the Liquidity Coverage Ratio, the Net Stable Funding Ratio, the Leverage Ratio, the Countercyclical Capital Buffer, and the Output Floor. Using fixed-effects regression models, the study finds that the impact of Basel III on credit supply is not uniform: while the Liquidity Coverage Ratio and Standardized Approach for Credit Risk are associated with an increase in lending, components like the Leverage Ratio and the Countercyclical Capital Buffer exhibit effects that depend on inflation and unemployment dynamics. These results suggest that well-capitalized and liquid banks may continue supporting credit, especially in times of economic stress. However, as many Basel III elements are still being phased in, particularly the Output Floor, the full effects remain to be seen. Limitations related to macroeconomic data availability and country-level aggregation also caution against generalization. Overall, the thesis challenges the presumption that Basel III inherently restricts lending and contributes to the growing literature supporting the possibility that well-designed regulation can enhance both financial stability and credit provision. |
| Supervisor | Danis, Andras |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2025/mamyrbekova_madina.pdf |
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