Literature Review on Integration of Regulatory Capital and Liquidity Instruments

Bank for International Settlements

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Date Published March 2016
Primary Author Basel Committee on Banking Supervision
Other Authors
Theme Housing Finance Policy


This working paper aims at reviewing the literature’s assessment of recent reforms. It consists of “three essays” on capital (Section 2), on liquidity and its interaction with capital (Section 3) and on other supervisory requirements (Section 4). Although there are many studies on the effects of capital requirements, there are relatively few on the effects of liquidity requirements and other supervisory tools. In part, this is because capital requirements have been in place for a considerable time and over more than one business cycle, while liquidity requirements and other supervisory tools, such as buffers, macroprudential policies and stress tests, have only been implemented since the recent financial crisis.

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