The Effectiveness of Bank Capital Adequacy Requirements: A Theoretical and Empirical Approach

Victor E. Barrios and Juan M. Blanco
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Victor E. Barrios: Universidad de Valencia, Departamento de Analisis Economico
Juan M. Blanco: Universidad de Valencia, Departamento de Analisis Economico

No 2001001, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: The aim of this paper is to analyse how banking firms set their capital ratios, that is, the rate of equity capital over assets. In order to study this issue, two theoretical models are developed. Both models deal with the existence of an optimal capital ratio; the first one for firms not affected by capital adequacy regulation, the second one for firms which are. The models have been tested by estimating a disequilibrium model using data of Spanish savings banks.

Keywords: capital ratio; capital adequacy regulation; disequilibrium model (search for similar items in EconPapers)
JEL-codes: C34 G21 G28 (search for similar items in EconPapers)
Pages: 25
Date: 2000-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2001001

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