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Capital regulation and bank lending

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Author Info
Frederick T. Furlong

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Abstract

Bank regulation in general and capital regulation in particular are widely perceived as having become stiffer in the 1990s. The stiffer regulatory environment in turn is argued to have curtailed bank lending. This article determines the extent to which capital standards changed in the 1990s and examines the relationship between capital positions and the bank lending. The empirical results suggest that capital standards did increase in the 1990s. The analysis also shows that bank loan growth rates are positively related to capital-to-assets ratios. Moreover, sensitivity of bank lending to capital positions appears to have increased in the 1990s. Regionally, capital regulation likely had the most pronounced. effect on bank lending in New England.

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Publisher Info
Article provided by Federal Reserve Bank of San Francisco in its journal Economic Review.

Volume (Year): (1992)
Issue (Month): ()
Pages: 23-33
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Handle: RePEc:fip:fedfer:y:1992:p:23-33:n:3

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Related research
Keywords: Bank supervision Bank capital Bank loans

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Joe Peek & Eric Rosengren, 1991. "The capital crunch: neither a borrower nor a lender be," Working Papers 91-4, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  2. Elizabeth S. Laderman & Ronald H. Schmidt & Gary C. Zimmerman, 1991. "Location, branching, and bank portfolio diversification: the case of agricultural lending," Economic Review, Federal Reserve Bank of San Francisco, issue Win, pages 24-38. [Downloadable!]
  3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October. [Downloadable!] (restricted)
  4. Fred Furlong, 1991. "Financial constraints and bank credit," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue May 24. [Downloadable!]
  5. Herbert Baer & John McElravey, 1992. "Capital adequacy and the growth of U.S. banks," Working Paper Series, Issues in Financial Regulation 92-11, Federal Reserve Bank of Chicago.
  6. Ben S. Bernanke & Cara S. Lown, 1991. "The Credit Crunch," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1991-2), pages 205-248. [Downloadable!]
  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wouter J. den Haan & Garey Ramey & Joel Watson, 1999. "Liquidity Flows and Fragility of Business Enterprises," Cowles Foundation Discussion Papers 1215, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  2. Elizabeth Laderman, 1994. "Risk-based capital requirements and loan growth," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue Oct 14. [Downloadable!]
  3. Raj Aggarwal & Kevin T. Jacques, 1998. "Assessing the impact of prompt corrective action on bank capital and risk," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 23-32. [Downloadable!]
  4. Thomas Bernauer & Vally Koubi, 2004. "Banking Crisis vs. Credit Crunch? A Cross-Country Comparison of Policy Responses to Dilemmas in Banking Regulation," Business and Politics, Berkeley Electronic Press, vol. 6(2), pages 1091-1091. [Downloadable!] (restricted)
  5. Sun Bae Kim & Ramon Moreno, 1994. "Stock prices and bank lending behavior in Japan," Economic Review, Federal Reserve Bank of San Francisco, pages 31-42. [Downloadable!]
    Other versions:
  6. John J. Seater, 2000. "Optimal Bank Regulation and Monetary Policy," Center for Financial Institutions Working Papers 00-38, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
  7. Joe Peek & Eric S. Rosengren, 1997. "How well capitalized are well-capitalized banks?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 41-50. [Downloadable!]
  8. Robert T. Clair & Paula Tucker, 1993. "Six causes of the credit crunch," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Sep, pages 1-19. [Downloadable!]
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