Abstract (eng)
Since the outbreak of the financial crisis, there has been an on-going debate in the regulatory environment on increasing capital requirements in the banking industry, with the objective of a safer financial system. The following thesis conducts a cost-benefit analysis of higher capital requirements in banking in order to answer the following research question: “Do the societal and entrepreneurial costs of increased capital requirements in banking overcome the benefits?” The benefits and costs of increased capital requirements are measured in terms of their impact on GDP. This thesis concludes that, in the long run, the benefits of a tighter regulatory environment overcome the costs.