Did Basel regulation cause a significant procyclicality?

This paper examines the procyclical effect of risk-sensitive capital regulation on bank lending. We find evidence that sensitivity lending to GDP is significantly positive under internal rating-based approach. Our findings show requirements Basel II and III regulations have effects in nine European countries. The introduction requirement rule negatively impacts these policy implication regulators should place greater priority building a buffer advance, which can be used times stress rather than for dampening excess cyclicality.