Regulatory Changes and the Cost of Capital for Banks

Anna Kovner, Peter Van Tassel and Brandon Zborowski

No 20181001a, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In response to the financial crisis nearly a decade ago, a number of regulations were passed to improve the safety and soundness of the financial system. In this post and our related staff report, we provide a new perspective on the effect of these regulations by estimating the cost of capital for banks over the past two decades. We find that, while banks? cost of capital soared during the financial crisis, after the passage of the Dodd-Frank Act (DFA), banks experienced a greater decrease in their cost of capital than nonbanks and nonbank financial intermediaries (NBFI).

Keywords: Bank Regulation; Banks; Beta; Cost of Capital; Dodd Frank (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2018-10-01
New Economics Papers: this item is included in nep-ban
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