Recent studies have found that banks with low capital ratios have significantly decreased their lending to the real estate sector. This correlation between real estate lending and bank capital could be the result of voluntary decisions by banks to recapitalize, or it could be the result of direct actions taken by bank regulators. We find that banks with low capital ratios reduce their real estate lending substantially more after formal regulatory actions have been initiated by regulators. Furthermore, this reduction in lending is particularly large for the categories of real estate borrowers most likely to be bank dependent.
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Publisher Info
Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number
95-2.
Length: Date of creation: 1995 Date of revision: Publication status: Published in Real Estate Economics 24, no. 1 (Spring 1996): 55-73. Handle: RePEc:fip:fedbwp:95-2
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