Bank capital management

International evidence

O.G. De Jonghe, Ö. Öztekin

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

We examine the dynamic behavior of bank capital using a global sample of 64 countries during the 1994-2010 period. Banks achieve deleveraging through active capital management (equity growth) rather than asset liquidation. In contrast, they achieve leveraging through passive capital management (reduced earnings retention) and substantial asset expansion (but also cash hoarding). The speed of capital structure adjustment is heterogeneous across countries. Banks make faster capital structure adjustments in countries with more stringent capital requirements, better supervisory monitoring, more developed capital markets, and high inflation. In times of crises, banks adjust their capital structure significantly more quickly.
Original languageEnglish
Pages (from-to)154-177
JournalJournal of Financial Intermediation
Volume24
Issue number2
Early online date19 Jan 2015
DOIs
Publication statusPublished - Apr 2015

Fingerprint

Bank capital
Capital management
Capital structure
Assets
Equity
Capital requirements
Capital markets
Liquidation
Monitoring
Cash
Bank crises
High inflation

Keywords

  • Bank
  • capital
  • regulation
  • international
  • speed of adjustment
  • Basel III

Cite this

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title = "Bank capital management: International evidence",
abstract = "We examine the dynamic behavior of bank capital using a global sample of 64 countries during the 1994-2010 period. Banks achieve deleveraging through active capital management (equity growth) rather than asset liquidation. In contrast, they achieve leveraging through passive capital management (reduced earnings retention) and substantial asset expansion (but also cash hoarding). The speed of capital structure adjustment is heterogeneous across countries. Banks make faster capital structure adjustments in countries with more stringent capital requirements, better supervisory monitoring, more developed capital markets, and high inflation. In times of crises, banks adjust their capital structure significantly more quickly.",
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Bank capital management : International evidence. / De Jonghe, O.G.; Öztekin, Ö.

In: Journal of Financial Intermediation, Vol. 24, No. 2, 04.2015, p. 154-177.

Research output: Contribution to journalArticleScientificpeer-review

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KW - regulation

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