Credit Growth and Bank Capital Requirements: Binding or Not?

Basel III and bank-lending: Evidence from the United States and Europe

“…The second body of literature on the role of bank capital in lending was developed in the first half of the 2000s, with a focus on the magnitude of the effect of bank capital ratios on banklending-growth (Kishan and Opiela, 2000;Gambacorta and Mistrulli, 2004;Berrospide and Edge, 2010;Beatty and Liao, 2011;Carlson et al, 2013;Bridges et al, 2014;Labonne and Lame 2014;Olszak et al, 2014;Kosak et al, 2015). These authors analyze the relative impacts of different types of capital ratios, such as risk-weighted capital and leverage ratios.…”

“…The effect of bank capital on bank-lending has been widely debated since the 1988 Basel accord (Bernanke and Lown, 1991;Berger and Udell, 1994;Rosengren, 1997, 2000;Kishan and Opiela, 2000;Gambacorta and Mistrulli, 2004;Berrospide and Edge, 2010;Beatty and Liao, 2011;Carlson et al, 2013;Bridges et al, 2014;Labonne and Lame 2014;Olszak et al, 2014;Kosak et al, 2015). Although some previous studies confirm that regulatory capital ratios behave similarly to equity ratio (Craig et al, 2006), Gambacorta and Marques-Ibanez (2011) and Chernykh and Cole (2015) show that regulatory capital ratios may be more accurate in measuring solvency.…”

Basel III and Bank-Lending: Evidence from the United States and Europe

“…The second body of literature on the role of bank capital in lending was developed in the first half of the 2000s, with a focus on the magnitude of the effect of bank capital ratios on banklending-growth (Kishan and Opiela, 2000;Gambacorta and Mistrulli, 2004;Berrospide and Edge, 2010;Beatty and Liao, 2011;Carlson et al, 2013;Bridges et al, 2014;Labonne and Lame 2014;Olszak et al, 2014;Kosak et al, 2015). These authors analyze the relative impacts of different types of capital ratios, such as risk-weighted capital and leverage ratios.…”

Real effects of bank capital regulations: Global evidence

“…The theoretical debate on the relation between capital regulations (almost exclusively referring to capital requirements) and loan growth highlights that there are both negative and positive effects, with the former seemingly dominating the debate (for recent studies, see Berrospide and Edge, 2010;Cohen, 2013;Labonne and Lamé, 2014;Bridges et al, 2015;De Nicolo, 2015). Higher capital requirements would, in principle, lead banks to downward manage their risk-weighted assets to meet the requirement.…”