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Macroeconomic Effects of Introducing a Capital Conservation Buffer in the Ukrainian Banking Sector

Authors :
Pervin Dadashova
Magnus Jonsson
Hanna Onyshchenko
Source :
Visnyk of the National Bank of Ukraine, Iss 243, Pp 33-42 (2018)
Publication Year :
2018
Publisher :
National Bank of Ukraine, 2018.

Abstract

The National Bank of Ukraine (NBU) is planning to introduce a capital conservation buffer in the Ukrainian banking sector over a four-year period starting in 2020. This new regulation will yield long-term benefits by strengthening the resilience of the banks, which will reduce the likelihood and costs of financial crises. However, higher capital requirements in the form of a capital conservation buffer can also result in short-term costs by temporarily lowering output. In this study, we use a dynamic general equilibrium model calibrated to fit some long-term features of the Ukrainian economy to evaluate how different implementation strategies affect the short-term output loss. We show that the output loss can be reduced by preannouncing and gradually implementing the buffer, along the lines that have already been advanced by the NBU.

Details

Language :
English
ISSN :
2414987X
Issue :
243
Database :
Directory of Open Access Journals
Journal :
Visnyk of the National Bank of Ukraine
Publication Type :
Academic Journal
Accession number :
edsdoj.04acc05f64cc46719dfa7f908bb3c061
Document Type :
article
Full Text :
https://doi.org/10.26531/vnbu2018.243.031