Time-varying capital requirements and disclosure rules: Effects on capitalization and lending decisions

Bjorn Imbierowicz, Jonas Kragh and Jesper Rangvid

No 18/2018, Discussion Papers from Deutsche Bundesbank

Abstract: We investigate how banks' capital and lending decisions respond to changes in bankspecific capital and disclosure requirements. We find that an increase in the bankspecific regulatory capital requirement results in a higher bank capital ratio, brought about via less asset risk. A decrease in the requirement implies more lending to firms but also less Tier 1 capital and higher bank leverage. We do not observe differences between confidential and public disclosure of capital requirements. Our results empirically illustrate a tradeoff between bank resilience and a fostering of the economy through more bank lending using banks' capital requirement as policy instrument.

Keywords: capital requirement; bank lending; bank capital structure; capital disclosure rules (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-rmg
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Citations: View citations in EconPapers (37)

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Related works:
Journal Article: Time‐Varying Capital Requirements and Disclosure Rules: Effects on Capitalization and Lending Decisions (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:182018

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