Does banks' systemic importance affect their capital structure adjustment process?

Yassine Bakkar (1) , Olivier de Jonghe (2) , Amine Tarazi (1)

1 LAPE - Laboratoire d'Analyse et de Prospective Economique
2 European Banking Center, Tilburg University and National Bank of Belgium.

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.

Mots clés: capital structure; speed of adjustment; systemic risk; systemic size; bank regulation

Domaines: Economies et finances

Yassine Bakkar, Olivier de Jonghe, Amine Tarazi. Does banks' systemic importance affect their capital structure adjustment process?. 2017. ⟨hal-01546995⟩