Methodology Overview
The methodology considers the long-term effects on GDP because:
there are
data constraints in calculating the short-term costs;
national regulations are still not in line with Basel III requirements;
bank data on risk-weighted assets and liquidity ratios are under Basel II calculations;
Costs of Basel III
how higher capital ratios affects bank lending spreads;
translating the increase in bank lending spreads into an impact on GDP.
Benefits of Basel III
more stringent regulations reduce the probability and severity of future financial crises