TY - BOOK ID - 84542831 TI - Capital Regulation and Tail Risk AU - Perotti, Enrico Camillo. AU - Ratnovski, Lev. AU - Vlahu, Razvan. AU - International Monetary Fund AU - International Monetary Fund. PY - 2011 SN - 1463901992 146390066X 1283567822 9786613880277 1463900651 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Bank capital KW - Banks and banking KW - Financial risk management KW - Risk management KW - Agricultural banks KW - Banking KW - Banking industry KW - Commercial banks KW - Depository institutions KW - Finance KW - Financial institutions KW - Money KW - Capital KW - State supervision KW - Econometric models. KW - Banks and Banking KW - Financial Risk Management KW - Taxation KW - Criteria for Decision-Making under Risk and Uncertainty KW - Banks KW - Depository Institutions KW - Micro Finance Institutions KW - Mortgages KW - Financial Institutions and Services: Government Policy and Regulation KW - Financing Policy KW - Financial Risk and Risk Management KW - Capital and Ownership Structure KW - Value of Firms KW - Goodwill KW - Taxation, Subsidies, and Revenue: General KW - Financial Crises KW - Financial services law & regulation KW - Public finance & taxation KW - Economic & financial crises & disasters KW - Capital adequacy requirements KW - Tax incentives KW - Countercyclical capital buffers KW - Financial crises KW - Financial regulation and supervision KW - Bank regulation KW - Asset requirements KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84542831 AB - The paper studies risk mitigation associated with capital regulation, in a context where banks may choose tail risk asserts. We show that this undermines the traditional result that high capital reduces excess risk-taking driven by limited liability. Moreover, higher capital may have an unintended effect of enabling banks to take more tail risk without the fear of breaching the minimal capital ratio in non-tail risky project realizations. The results are consistent with stylized facts about pre-crisis bank behavior, and suggest implications for the optimal design of capital regulation. ER -