Wednesday, August 18, 2010

I am back!!!!

I know, it has been a while. Just realize that the last post I have here is back in March, almost half a year ago.

In this WSJ piece, apparently some Basel Committe economists have done regression work which shows that imposing higher capital standard on banks will bring in long-term benefits which outweigh short term costs....

Since I am not an econometric expert here, I would not quibble with their results. But then again at least I know this: imposing higher K-standard would likely raise the bar for entrants in the banking industry. And this in turn means the banking sector would be less competitive than it would have been if the K-requirment has not been lifted. Now that has got to be costs to the economy as a result of this reduction in competitiveness in the economy, and I am not sure that this costs of the unintended consequence of an apparently "beneficial" policy have been taken into account by the researchers.

No comments: