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Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? National Bank of Belgium, Working Paper No. 369

Bakkar, Yassine and De Jonghe, Olivier and Tarazi, Amine (2019) Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? National Bank of Belgium, Working Paper No. 369. [Working Paper]

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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.

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    Item Type: Working Paper
    Uncontrolled Keywords: capital structure, speed of adjustment, systemic risk, systemic size, bank regulation, lending, balance sheet composition
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > banks/financial markets
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > National Bank of Belgium (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 02 Oct 2019 11:21
    Number of Pages: 61
    Last Modified: 02 Oct 2019 11:21
    URI: http://aei.pitt.edu/id/eprint/97558

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