Market liquidity shortage and banks' capital structure and balance sheet adjustments: evidence from U.S. commercial Banks

Abstract : Using quarterly data of U.S. commercial banks, we investigate the impact of market liquidity shortages on banks' capitalization and balance sheet adjustments. Our findings reveal that an acute liquidity shortage leads small U.S. commercial banks, but not large ones, to positively adjust their total capital ratio. Small banks adjust their total capital ratio by downsizing, by restricting dividend payments, by decreasing the share of assets with higher risk weights and specifically by extending less loans. Furthermore, the positive impact on total capital ratios is stronger for small banks which are more reliant on market liquidity and small banks operating below their target capital ratio.
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https://hal-unilim.archives-ouvertes.fr/hal-01965938
Contributeur : Thierno Barry <>
Soumis le : mardi 30 avril 2019 - 11:01:05
Dernière modification le : vendredi 3 mai 2019 - 01:32:20

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  • HAL Id : hal-01965938, version 2

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Thierno Barry, Alassane Diabaté, Amine Tarazi. Market liquidity shortage and banks' capital structure and balance sheet adjustments: evidence from U.S. commercial Banks. 2019. ⟨hal-01965938v2⟩

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