Actions for Bank Capital [electronic resource]: Lessons from the Financial Crisis

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Bank Capital [electronic resource]: Lessons from the Financial Crisis

Author
Merrouche, Ouarda
Published
Washington : International Monetary Fund Dec. 2010
Physical Description
70 p.
Additional Creators
Detragiache, Enrica and Demirg-Kunt, Asli
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Summary
Annotation Using a multi-country panel of banks, we study whether better capitalized banks experienced higher stock returns during the financial crisis. We differentiate among various types of capital ratios: the Basel risk-adjusted ratio; the leverage ratio; the Tier I and Tier II ratios; and the tangible equity ratio. We find several results: (i) before the crisis, differences in capital did not have much impact on stock returns; (ii) during the crisis, a stronger capital position was associated with better stock market performance, most markedly for larger banks; (iii) the relationship between stock returns and capital is stronger when capital is measured by the leverage ratio rather than the risk-adjusted capital ratio; (iv) higher quality forms of capital, such as Tier 1 capital and tangible common equity, were more relevant.
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ISBN
9781455210930
1455210935 (Trade Paper)
View MARC record | catkey: 15210249