The Determinants of Bank Capital Structure
Review of Finance, Vol. 14, pp. 587-622, 2010
50 Pages Posted: 2 Mar 2007 Last revised: 14 Jul 2011
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: Suggested Citation