The Effects of Bank Regulation on the Relationship Between Capital and Risk

Capital regulation acts as an external force in the determination of bank capital and risk levels. Changes in the regulatory framework can influence banks’ decisions. Starting from the debate of the prudential regulation after the financial crisis, this paper reviews the main empirical contributions...

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Bibliographic Details
Published in:Comparative economic studies 2015-03, Vol.57 (1), p.31-54
Main Author: Tanda, Alessandra
Format: Article
Language:English
Subjects:
Analysis
Bank capital
Banking industry
Banking law
Banks
Business cycles
Capital requirements
Economic crisis
Economic impact
Economic theory
Economics
Economics and Finance
Evolution
Incentives
Institutional investments
International Economics
Laws, regulations and rules
Moral hazard
Political Economy/Economic Systems
Regulation of financial institutions
Risk (Economics)
Risk exposure
Risk management
Solvency
Studies
Survey Article
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Summary:Capital regulation acts as an external force in the determination of bank capital and risk levels. Changes in the regulatory framework can influence banks’ decisions. Starting from the debate of the prudential regulation after the financial crisis, this paper reviews the main empirical contributions on the role of capital regulation in the determination of banks’ capital ratios and risk exposure to evaluate bank behavior. Capital and risk decisions seem to be effectively influenced by regulation, although results may vary according to factors such as time period, country, and the type of capital analyzed.
ISSN:0888-7233
1478-3320
DOI:10.1057/ces.2014.35