Bank Capital Behaviour: Empirical Evidence for Switzerland

Bertrand Rime ()
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Bertrand Rime: Swiss National Bank, http://www.snb.ch/

No 00.05, Working Papers from Swiss National Bank, Study Center Gerzensee

Abstract: In recent years, regulators have increased their focus on the capital adequacy of banking institutions to enhance the stability of the financial system. The purpose of the present paper is to shed some light on whether and how Swiss Banks react to constraints placed by the regulator on their capital. Building on previous work by Shrieves and Dahl (1992), we use a simultaneous equations model to analyse adjustments in capital and risk at Swiss banks, when those approach the minimum regulatory capital level. Our results indicate that regulatory pressure induce banks to increase their capital, but does not affect the level of risk.

Keywords: Risk-based capital; Capital ratios; Portfolio risk (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2000-03
New Economics Papers: this item is included in nep-fin
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Forthcoming, Journal of Banking and Finance

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