Excessive capital requirements will make markets more chaotic – Myron Scholes

Myron Scholes

Requiring banks to hold too much capital will result in more volatile financial markets, according to a Nobel prize-winning quantitative analyst.

Speaking at an event hosted by Japanese bank Nomura, Myron Scholes said setting capital requirements that are too onerous would mean banks would need too high a return for intermediating in the markets, and that as a result their "correcting influence" would be absent.

"If you restrict or require more capital of banks, what will happen is that they

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Register

Want to know what’s included in our free membership? Click here

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here