How does capital affect bank performance during financial crises?

A.N. Berger, C.H.S. Bouwman

    Research output: Contribution to journalArticleScientificpeer-review

    Abstract

    This paper empirically examines how capital affects a bank’s performance (survival and market share) and how this effect varies across banking crises, market crises, and normal times that occurred in the US over the past quarter century. We have two main results. First, capital helps small banks to increase their probability of survival and market share at all times (during banking crises, market crises, and normal times). Second, capital enhances the performance of medium and large banks primarily during banking crises. Additional tests explore channels through which capital generates these effects. Numerous robustness checks and additional tests are performed.
    Original languageEnglish
    Pages (from-to)146-176
    JournalJournal of Financial Economics
    Volume109
    Issue number1
    Publication statusPublished - 2013

      Fingerprint

    Cite this