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Pré-publication, Document de travail

Excess control rights, bank capital structure adjustment and lending

Abstract : We investigate whether excess control rights of ultimate owners in pyramids affect banks' adjustment to their target capital ratio. When ultimate control rights and cash-flow rights are identical, banks increase their capital ratio by issuing equity and by reshuffling their assets without slowing their lending. However, when control rights exceed cash-flow rights, banks are reluctant to issue equity to increase their capital ratio and, instead, shrink their assets by mainly cutting their lending. A deeper investigation shows that this behavior is only apparent in family-controlled banks and in countries with relatively weak shareholder protection rights. Our findings provide new insights in the capital structure adjustment process and have critical policy implications for the implementation of Basel III.
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Pré-publication, Document de travail
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https://hal-unilim.archives-ouvertes.fr/hal-00967892
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Soumis le : lundi 31 mars 2014 - 10:05:17
Dernière modification le : vendredi 6 mars 2020 - 02:06:06
Archivage à long terme le : : lundi 10 avril 2017 - 06:39:39

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  • HAL Id : hal-00967892, version 1

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Laetitia Lepetit, Amine Tarazi, Nadia Zedek. Excess control rights, bank capital structure adjustment and lending. 2013. ⟨hal-00967892⟩

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