GTAP Resources: Resource Display
| GTAP Resource #6251 |
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"Assessing the Economy-wide Impacts of Strengthened Bank Capital Requirement in Indonesia using a Financial-Computable General Equilibrium Model" by Rasyid, Arief, Jason Nassios, Louise Roos and James Giesecke Abstract After the 2008 global financial crisis, authorities across the globe stressed the importance of equity capital to absorb losses. While many countries have raised their banks’ capital adequacy requirements (CARs), the comprehensive impact assessment of this policy for emerging economies remains largely unexplored. We use a financial computable general equilibrium (FCGE) model of Indonesia called AMELIA-F to investigate the economy-wide impact of a 100 basis points increase in the CAR of Indonesian banks. We find that this causes small negative consequences on the economy. Bank balance sheets contract as they move away from holding riskier assets. This reduces investment in both non-housing and housing sectors, as equity financing raises banks weighted average costs of capital (WACC). The falling of real investments decreases foreign financing requirement, causing appreciation of the nominal exchange rate. |
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- Dynamic modeling - Economic crisis - Economic growth - Asia (East) |
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If you have trouble accessing any of the attachments below due to disability, please contact the authors listed above.
Public Access  Paper (1.2 MB) Replicated: 0 time(s) Presentation (1.1 MB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 1:05:45 PM
