THE IMPACT OF CAPITAL RATIO ON LENDING OF EU BANKS – THE ROLE OF BANK SPECIALIZATION AND CAPITALIZATION
Małgorzata Olszak (),
Mateusz Pipień () and
Sylwia Roszkowska ()
Additional contact information
Sylwia Roszkowska: University of Lodz, National Bank of Poland
Equilibrium. Quarterly Journal of Economics and Economic Policy, 2016, vol. 11, issue 1, 43-59
In this paper we aim to find out whether bank specialization and bank capitalization affect the relationship between loans growth and capital ratio, both in expansions and in contractions. We hypothesize that the impact of bank capital on lending is relatively strong in cooperative banks and savings banks. We also expect that this effect is nonlinear, and is stronger in “low” capital banks than in “high” capital banks. In order to test our hypotheses, we apply the two-step GMM robust estimator for data spanning the years 1996–2011 on individual banks available in the Bankscope database. Our analysis shows that lending of poorly capitalized banks is more affected by capital ratio than lending of well-capitalized banks. Loans growth of cooperative and savings banks is more capital constrained that lending of commercial banks. Capital matters for the lending activity in contractions only in the case of savings and “low” capital banks.
Keywords: loan supply; capital ratio; procyclicality (search for similar items in EconPapers)
JEL-codes: E32 G21 G28 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Working Paper: The impact of capital ratio on lending of EU banks – the role of bank specialization and capitalization (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pes:ierequ:v:11:y:2016:i:1:p:43-59
Access Statistics for this article
Equilibrium. Quarterly Journal of Economics and Economic Policy is currently edited by Adam P. Balcerzak
More articles in Equilibrium. Quarterly Journal of Economics and Economic Policy from Institute of Economic Research Contact information at EDIRC.
Series data maintained by Adam P. Balcerzak ().