Recently published studies carried out by the working groups established by the Basel Committee on Banking Supervision and the Financial Stability Board attempted to perform such a cost/benefit analysis. 5 The benefits are measured by combining the decline in the probability of banking crises made possible by the new regulation with the average output losses associated with banking crises.
It is found, for instance, that a 25% increase in the ratio of liquid assets over total assets could reduce the probability of banking crises by about one percentage point.