Do Better Capitalized Banks Lend Less? Long-Run Panel Evidence from Germany
Higher capital features prominently in proposals for regulatory reform. But how does increased bank capital affect business loans? The real costs of increased bank capital in terms of reduced loans are widely believed to be substantial. But the negative real‐sector implications need not be severe. I...
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| Veröffentlicht in: | International finance (Oxford, England) England), 2014-03, Vol.17 (1), p.1-23 |
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| container_title | International finance (Oxford, England) |
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| creator | Buch, Claudia M. Prieto, Esteban |
| description | Higher capital features prominently in proposals for regulatory reform. But how does increased bank capital affect business loans? The real costs of increased bank capital in terms of reduced loans are widely believed to be substantial. But the negative real‐sector implications need not be severe. In this paper, we take a long‐run perspective by analysing the link between the capitalization of the banking sector and bank loans using panel cointegration models. We study the evolution of the German economy for the past 44 years. Higher bank capital tends to be associated with higher business loan volume, and we find no evidence for a negative effect. This result holds both for pooled regressions as well as for the individual banking groups in Germany. |
| doi_str_mv | 10.1111/infi.12041 |
| format | Article |
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This result holds both for pooled regressions as well as for the individual banking groups in Germany.</description><subject>Banking</subject><subject>Banking industry</subject><subject>Capitalization</subject><subject>Economic history</subject><subject>Loans</subject><subject>Regulatory reform</subject><subject>Studies</subject><issn>1367-0271</issn><issn>1468-2362</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2014</creationdate><recordtype>article</recordtype><recordid>eNp9kMtOwzAQRSMEEqWw4QsssUNK8dhOnKwQfVIRSlUVIbGxHMdB6cMpdgqUryclwJJZzMzi3BnpeN454A7UdVWYvOgAwQwOvBawMPIJDclhvdOQ-5hwOPZOnFtgDDHjtOXd9UvU1VWlLerJTVHJVfGpM9SVZulQok1WN-euUVKaF3-2NWgqjV6hwVuRaaM0ym25RiNt19LsTr2jXK6cPvuZbe9xOJj3bv3kYTTu3SS-YjQGP-UsDNNY8RQryalOgxhDIJXMFMQRy6UklBOgURBIxphSEFEuGdGM4CAjkra9i-buxpavW-0qsSi31tQvBQQQ8JAyFtfUZUMpWzpndS42tlhLuxOAxV6W2MsS37JqGBr4vVjp3T-kGE-G49-M32QKV-mPv4y0SxFyygPxNBmJ_vP9dDKHmYjoFwtYeTA</recordid><startdate>20140301</startdate><enddate>20140301</enddate><creator>Buch, Claudia M.</creator><creator>Prieto, Esteban</creator><general>Blackwell Publishing Ltd</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20140301</creationdate><title>Do Better Capitalized Banks Lend Less? 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Long-Run Panel Evidence from Germany</atitle><jtitle>International finance (Oxford, England)</jtitle><addtitle>International Finance</addtitle><date>2014-03-01</date><risdate>2014</risdate><volume>17</volume><issue>1</issue><spage>1</spage><epage>23</epage><pages>1-23</pages><issn>1367-0271</issn><eissn>1468-2362</eissn><abstract>Higher capital features prominently in proposals for regulatory reform. But how does increased bank capital affect business loans? The real costs of increased bank capital in terms of reduced loans are widely believed to be substantial. But the negative real‐sector implications need not be severe. In this paper, we take a long‐run perspective by analysing the link between the capitalization of the banking sector and bank loans using panel cointegration models. We study the evolution of the German economy for the past 44 years. Higher bank capital tends to be associated with higher business loan volume, and we find no evidence for a negative effect. 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| language | eng |
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| source | EBSCOhost Business Source Complete; Access via Wiley Online Library |
| subjects | Banking Banking industry Capitalization Economic history Loans Regulatory reform Studies |
| title | Do Better Capitalized Banks Lend Less? Long-Run Panel Evidence from Germany |
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