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

Yassine Bakkar, Olivier De Jonghe and Amine Tarazi

No 369, Working Paper Research from National Bank of Belgium

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.

Keywords: capital structure; speed of adjustment; systemic risk; systemic size; bank regulation; lending; balance sheet composition (search for similar items in EconPapers)
JEL-codes: G20 G21 G28 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2019-03
New Economics Papers: this item is included in nep-acc, nep-ban, nep-cfn, nep-ict and nep-rmg
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Citations: View citations in EconPapers (10)

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https://www.nbb.be/fr/articles/does-banks-systemic ... nce-sheet-adjustment (application/pdf)

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? (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? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:201903-369

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