Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes?

Yassine Bakkar, Olivier De Jonghe and Amine Tarazi

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Abstract: Frictions prevent banks to immediately adjust their capital ratio towards their desired and/or imposed level. This paper analyzes (i) whether or not these frictions are larger for regulatory capital ratios vis-à-vis a plain leverage ratio; (ii) which adjustment channels banks use to adjust their capital ratio; and (iii) how the speed of adjustment and adjustment channels differ between large, systemic and complex banks versus small banks. Our results, obtained using a sample of listed banks across OECD countries for the 2001–2012 period, bear critical policy implications for the implementation of new (systemic risk-based) capital requirements and their impact on banks' balance sheets, specifically lending, and hence the real economy.

Date: 2023-06
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Published in Journal of Banking and Finance, 2023, 151, pp.105518. ⟨10.1016/j.jbankfin.2019.03.002⟩

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Related works:
Journal Article: Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? (2023)
Working Paper: Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? (2022)
Working Paper: Does banks' systemic importance affect their capital structure and balance sheet adjustment processes? (2019)
Working Paper: Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? (2019)
Working Paper: Does banks' systemic importance affect their capital structure and balance sheet adjustment processes? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04678216

DOI: 10.1016/j.jbankfin.2019.03.002

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