Sharing the Burden Equally? Intra-Group Effects of Bank Capital Requirements

Hans Degryse, Mike Mariathasan and Carola Theunisz

No 18443, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper investigates the intra-group transmission of stricter capital regulation imposed at the banking group level. Specifically, we study how a policy-induced increase in the regulatory capital ratio impacts the capital adequacy composition, lending and risk-taking of the affiliated subsidiaries. Using a combination of bank and loan-level data, we find that once a banking group faces tighter consolidated capital requirements, the recapitalization efforts are concentrated at the subsidiary- as opposed to the headquarters-level. Subsidiaries reduce risk-weighted assets in part through a reduction in credit supply. This contraction is more pronounced at subsidiaries that are either relatively small, less profitable or loosely regulated.

JEL-codes: E51 E58 F36 F42 G21 G28 (search for similar items in EconPapers)
Date: 2023-09
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18443 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18443

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18443

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().