Do better-capitalized banks lend less? Evidence from European banks

Yener Altunbas, Caterina Di Tommaso and John Thornton

Finance Research Letters, 2016, vol. 17, issue C, 246-250

Abstract: We examine the link between bank capital and earning assets in five European countries during 1989–2012 using panel cointegration techniques. We find that higher bank capital is associated with a higher volume of earning assets, including bank loans. However, we also find some evidence that bank capitalization would impact negatively on the growth of bank lending at capital-to-asset ratios above 15%, which is below the ratio mandated for some UK-headquartered banks in the UK's 2013 Bank Reform Act.

Keywords: Bank capital; Bank lending; Panel cointegration (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:17:y:2016:i:c:p:246-250

DOI: 10.1016/j.frl.2016.03.022

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