The costs of regulatory reform affecting financial institutions following the crisis of the late 2000s will produced only a modest increase in bank lending rates in the United States, Europe and Japan in the long term, according to a study released by the International Monetary Fund this week.The IMF estimated the rise in regulatory costs - measured as a rise in average bank lending rates - at 28 basis points in the United States, 17 bps in Europe, and eight bps in Japan over the long term. "By comparison, the smallest increment by which major central banks adjust their short-term policy rates is 25 bps, which tends to have a small effect on economic growth," the IMF paper noted.The IMF contrasted its conclusions with a study by the Institute for International Finance - a banking industry lobby group - that argued regulatory reform would reduce GDP by three per cent in 2015."Reforming the regulation of financial institutions and markets is critically important and should provide large benefits to society," the paper said. The costs of reform to the financial sector include substantially stronger capital and liquidity requirements.Locally, banks regulators are also arguing that the costs outweigh the benefits.The Reserve Bank of New Zealand asserted that this was so in a consultation document on Basel III released this week. The Australian Prudential Regulation Authority has also said it will publish an analysis on the issue.