Bank Capital Redux: Solvency, Liquidity, and Crisis - Archive ouverte HAL Access content directly
Journal Articles Review of Economic Studies Year : 2021

Bank Capital Redux: Solvency, Liquidity, and Crisis

, , (1, 2, 3) ,
1
2
3
Òscar Jordà
  • Function : Author
Björn Richter
  • Function : Author
Alan Taylor
  • Function : Author

Abstract

What is the relationship between bank capital, the risk of a financial crisis, and its severity? This article introduces the first comprehensive analysis of the long-run evolution of the capital structure of modern banking using newly constructed data for banks’ balance sheets in 17 countries since 1870. In addition to establishing stylized facts on the changing funding mix of banks, we study the nexus between capital structure and financial instability. We find no association between higher capital and lower risk of banking crisis. However, economies with better capitalized banking systems recover faster from financial crises as credit begins to flow back more readily.

Dates and versions

hal-03944475 , version 1 (18-01-2023)

Licence

Attribution - NonCommercial - NoDerivatives - CC BY 4.0

Identifiers

Cite

Òscar Jordà, Björn Richter, Moritz Schularick, Alan Taylor. Bank Capital Redux: Solvency, Liquidity, and Crisis. Review of Economic Studies, 2021, 88 (1), pp.260-286. ⟨10.1093/restud/rdaa040⟩. ⟨hal-03944475⟩
0 View
0 Download

Altmetric

Share

Gmail Facebook Twitter LinkedIn More