TY  - UNPD
A1  - Gortner, Paul J.
A1  - Massenot, Baptiste
T1  - Macroprudential policy in the lab
T2  - SAFE working paper series ; No. 239
N2  - Higher capital ratios are believed to improve system-wide financial stability through three main channels: (i) higher loss-absorption capacity, (ii) lower moral hazard, (iii) stabilization of the financial cycle if capital ratios are increased during good times. We examine these mechanisms in a laboratory asset market experiment with indebted participants. We find support for the loss-absorption channel: higher capital ratios reduce the bankruptcy rate. However, we do not find support for the moral hazard channel. Higher capital ratios (insignificantly) increase asset price bubbles, an aggregate measure of excessive risk-taking. Additional evidence suggests that bankruptcy aversion explains this surprising result. Finally, the evidence supports the idea that higher capital ratios in good times stabilize the financial cycle.
T3  - SAFE working paper - 239 
Y1  - 2018
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/48598
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-485987
UR  - https://ssrn.com/abstract=3311378
IS  - December 20, 2018
PB  - SAFE
CY  - Frankfurt am Main
ER  -