Basel II Capital Requirements Could Worsen Recession Impact on Norwegian Banks
The study looked at how new banking rules called Basel II could make things worse during a recession. They found that in a bad economy, Norwegian banks would need more money to cover potential losses. This could lead to a cycle where banks struggle more when times are tough. The study used a special test to see how banks' money and the new rules would change in a recession. The results showed that the new rules could make things harder for banks in Norway when the economy is not doing well.