REGULATION OF BANKS’ CAPITAL AND MACRO-STABILITY — A THEORETICAL APPRAISAL

Following the adoption of the New Economic Policy (NEP) by India in July 1991, Government of India (GOI) has started viewing banks as commercially organized profit driven financial institutions whose viability depends upon their ability to make profit. Like all capitalist economies, India is also subject to trade cycles and onset of a recession leads to a drop in banks’ profit levels and an increase in their stock of non-performing assets. This prompts the government to ask banks to tighten lending norms and maintaining adequate capital buffer as mandated by minimum capital requirement norm. This paper develops a simple baseline model to examine the implications of this kind of a policy. It shows that the policy noted above deepens recession, increases inequality and exacerbates the problem of non-performing assets and lowers profit. It also shows that, instead of taking the banks and the defaulting firms to task for a factor that is completely beyond their control, the best way of tackling this problem is to adopt appropriate stabilization programmes to counter the recession.

1991年7月印度颁布新经济政策（New Economic Policy, NEP）后，印度政府（Government of India, GOI）开始将银行界定为以营利为导向的商业化金融机构，其存续能力取决于自身的盈利能力。与所有资本主义经济体一样，印度同样受经济周期波动影响，当经济衰退爆发时，银行利润水平会出现下滑，不良资产（non-performing assets）存量则会上升。这促使政府要求银行收紧放贷标准，并按照最低资本要求的相关规定维持充足的资本缓冲（capital buffer）。本文构建了一个简单的基准模型（baseline model），用以考察此类政策的影响效应。研究结果显示，上述政策会加剧经济衰退、扩大收入不平等、恶化不良资产问题，并压低银行利润。此外，研究还表明，既然引发问题的因素完全超出银行与违约企业的可控范围，那么与其追责这些市场主体，不如通过实施恰当的稳定化政策来应对经济衰退，这才是解决该问题的最优路径。