A study published yesterday by the International Monetary Fund found that new financial rules likely will result in a relatively small increase in the cost of loans in the U.S., Europe and Japan, the Wall Street Journal reported today. The study is the latest to challenge the argument mounted by banks that a number of new rules, especially stricter capital and liquidity requirements, will crimp lending and raise the cost of loans to borrowers, hurting economic growth. In the long term, lending rates likely would rise 0.28 percentage point in the U.S., 0.17 percentage point in Europe and 0.08 percentage point in Japan, the study found. According to their estimate, a business borrowing from a U.S. bank would pay an additional $2,800 of interest each year on a $1 million loan. The additional cost is similar to the increment of a quarter percentage point that the Federal Reserve and other central banks frequently use to adjust short-term interest rates.
