Economics, Econometrics and Finance
4 years ago

New leverage ratio requirement boosts bank stability and protects against toxic loans.

RePEc: Research Papers in Economics
Does a leverage ratio requirement increase bank stability
Ilkka Kiema, Esa Jokivuolle

Paper Summary

The leverage ratio requirement (LRR) in Basel III helps banks by providing a safety net against model risk from misrated loans. This requirement affects how banks lend money and impacts their stability.

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