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Jan 22, 2015 · Capital regulation acts as an external force in the determination of bank capital and risk levels. Changes in the regulatory framework can influence banks’ decisions. Starting from the debate of the prudential regulation after the financial crisis, this paper reviews the main empirical contributions on the role of capital regulation in the determination of banks’ capital ratios and risk ...
- Alessandra Tanda
- 2015
Oct 1, 2024 · The BRSS offers a comprehensive overview of the evolution in bank capital regulations and bank risk after the global financial crisis (Anginer et al., 2019). 1 We complement the analyses with bank-level data from around 13,800 banks for up to 126 jurisdictions to uncover evidence on how the quality of bank capital affects individual bank risk depending on bank and country characteristics.
- Deniz Anginer, Ata Can Bertay, Robert Cull, Asli Demirgüç-Kunt, Davide S. Mare, Davide S. Mare
- 2021
Apr 17, 2019 · The globalization of financial markets, information technology development, and increasing competition have largely affected bank business and its risk management. Together with these forces, regulatory factors play a significant role. This chapter approaches bank risk management under the regulators’ perspective with an emphasis on the risk-based capital regulation. Specifically, how bank ...
- Nguyen Thi Thieu Quang, Christopher Gan
- 2019
Bank capital and socially optimal regulation. A bank’s decision to fund its lending activities through either equity or debt depends on two conflicting factors: Equity is costlier than debt. Bank shareholders face greater risks than debt holders and, as a result, require a higher expected return.
- Alejandro García, Josef Schroth
- 2021
This study investigates the link between capital regulation and bank risk-taking. Using a sample of over 1,800 banks in 135 countries, I find that the relationship between capital regulation and bank risk-taking (measured by z-score) is an inverse ‘U’ shape. That is, as capital ratios increase, a bank will take less risk initially, then ...
- Roshanthi Dias
- 2021
Aug 1, 2023 · The study of the direct effect of banking regulation and investors’ protection on the banks’ risk-taking behavior, as discussed above, is then complemented with another strand of literature that recognizes the existence of important channels through which banking regulation influences risk: market power (Agoraki et al., 2011, Danisman and Demirel, 2019), deposit insurance (Ashraf et al ...
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Does capital regulation affect bank risk-taking?
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We also show that an increase in the overall capital adequacy ratio reduces the risk appetite of banks in both ex-ante and ex-post terms. On the other hand, loan growth per se does not affect bank risk. The macro-economic (or systemic) dynamics of GDP cycles as well as property prices and interest rates appear also to be drivers of bank risk.
