Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements
IMF Working Paper No. 11/103: Author/Editor: Roger, Scott ; Vlcek, Jan
 
Summary: This paper uses a DSGE model with banks and financial frictions in credit markets to assess the medium-term macroeconomic costs of increasing capital and liquidity requirements. The analysis indicates that the macroeconomic costs of such measures are sensitive to the length of the implementation period as well as to the adjustment strategy used by banks, and the scope for monetary policy to respond to the regulatory changes.
Full text :
http://www.imf.org/external/pubs/ft/wp/2011/wp11103.pdf