The impact of regulation on bank equity infusions

This article examines the extent to which regulatory capital standards influence infusions of external equity into commercial banks. While such infusions occur infrequently, they result in large adjustments to overall bank capital and provide important signals to regulators of managerial intent. Usi...

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Bibliographic Details
Published in:Journal of banking & finance 1990-12, Vol.14 (6), p.1209-1228
Main Authors: Dahl, Drew, Shrieves, Ronald E.
Format: Article
Language:English
Subjects:
Banks
Commercial banks
Comparative studies
Economic models
Economic theory
Equity
Equity capital
Impacts
Regulation
Statistical analysis
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Summary:This article examines the extent to which regulatory capital standards influence infusions of external equity into commercial banks. While such infusions occur infrequently, they result in large adjustments to overall bank capital and provide important signals to regulators of managerial intent. Using a sample of 753 equity capital issues occurring during 1986 and 1987, we find evidence that regulatory minimum capital constraints are instrumental in influencing the financing decisions made by a significant subset of banks.
ISSN:0378-4266
1872-6372
DOI:10.1016/0378-4266(90)90010-Y