European Parliament Library

Bank Capital :, Lessons From the Financial Crisis, Ouarda Merrouche, Enrica Detragiache, Asli Demirgüç-Kunt

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
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Sample Selection, Data Description, And Empirical Model; 1. Average Quarterly Bank Stock Returns by Country, Q1.2006-Q12009; 1. Bank Stock Returns Before and During the Crisis; 2. Summary Statistics: Capital Ratios 20; 3. Correlation Matrix; III. The Results; 4. Stock Market Performance and Bank Capital over the Financial Cycle; 5. Tier 1 and Tier 2 Capital and Tangible Common Equity; 2. Response of Bank Stock Returns to Lagged Bank Capital Before and During the Financial Crisis
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (50 p.)
Specific Material Designation
Form Of Item

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