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Title The role of bank capital in bank holding companies' decisions / prepared by Adolfo Barajas [and others]
Published [Washington, D.C.] : International Monetary Fund, ©2015


Description 1 online resource (37 pages) : color illustrations
Series IMF working paper, 1018-5941 ; WP/15/57
IMF working paper ; WP/15/57.
Contents Cover Page; Title Page; Copyright Page; Contents; Tables; Figures; I. Introduction; Table 1. Regulatory Capital Requirements in The United States; Table 2. Descriptive Statistics of Capital Ratios; II. Bank Capital Decisions; III. Data and Results; A. Data; Figure 1. Distributions of Capital Ratios: Before, During and After the Crisis; B. Results; Table 3. Results for the Optimal Capital Ratio, 2001Q1-2014Q1 (6); Table 4. Results for the Optimal Capital Ratio, 2001Q1-2007Q2 (6); Table 5. Results for the Optimal Loan Rate, 2001Q1-2014Q1 (7)
Table 6. Results for the Optimal Quantity of Loans (8)IV. Robustness; A. Results After the Financial Crisis; Table 7. Results for the Optimal Capital Ratio, 2009Q2-2014Q1 (6); Table 8. Results for the Optimal Loan Rate (7), 2009Q2-2014Q1; B. Vector Autoregression (VAR) Analysis; Figure 2. Impulse Responses for a Shock to the Total Risk-Based Ratio (2001Q1-2014Q1); Figure 3. Impulse Responses for a Stock to Log Real Total Loans (2001Q1-2014Q1); V. Conclusion; A Derivation of the Option Value of Capital; References; Footnotes
Summary Paper examines the role of bank capital in decision-making by bank holding companies (BHCs) in the United States. Following Chami and Cosimano's (2001) call option approach to bank capital, BHCs optimally choose the amount of capital to insure the bank against becoming capital constrained in the future. We provide empirical support for this model, and find that a higher optimal level of capital leads to higher loan rates. Furthermore, higher loan rates result in lower amounts of lending. Thus, an increase in capital requirements is likely to lead to higher loan rates and a significant reduction in lending. --Abstract
Notes "Prepared by Adolfo Barajas, Thomas Cosimano, Dalia Hakura, and Sebastian Roelands."
"March 2015."
Bibliography Includes bibliographical references (pages 24-26)
Notes Online resource; title from pdf title page ( Web site, viewed March 20, 2015)
Subject Bank capital -- United States -- Econometric models
Bank holding companies -- United States -- Econometric models
Bank loans -- United States -- Econometric models
Bank capital -- Econometric models
Bank loans -- Econometric models
United States
Form Electronic book
Author Barajas, Adolfo.
International Monetary Fund. African Department.
ISBN 9781498393324