The Determinants of Bank Capital Structure

50 Pages Posted: 2 Mar 2007 Last revised: 14 Jul 2011

See all articles by Reint Gropp

Reint Gropp

Halle Institute for Economic Research

Florian Heider

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: September 17, 2009


This paper documents that standard cross-sectional determinants of firm leverage also apply to the capital structure of large banks in the United States and Europe. We find a remarkable consistency in sign, significance and economic magnitude. Like non-financial firms, banks appear to have stable capital structures at levels that are specific to each individual bank. The results suggest that capital requirements may only be of second-order importance for banks' capital structures and confirm the robustness of current corporate finance findings in a holdout sample of banks.

Keywords: capital structure, corporate finance, leverage, bank capital, banking regulation

JEL Classification: G32, G21

Suggested Citation

Gropp, Reint and Heider, Florian, The Determinants of Bank Capital Structure (September 17, 2009). Review of Finance, Vol. 14, pp. 587-622, 2010 ; Zentum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research, Vol. 8, No. 15, 2008. Available at SSRN:

Reint Gropp

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108

Florian Heider (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314

HOME PAGE: http://

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics