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How Do Banks Determine Capital? Empirical Evidence for Germany

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  • Weber, Martin
  • Kleff, Volker
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    Abstract

    This paper examines how capital is determined by German banks. We analyse whether the determinants found in the previous empirical literature hold for the special German banking sector with its three characteristic banking groups of savings banks, cooperative banks and other banks. On the basis of a unique data set of nearly all German banks between 1992 and 2001 provided by the Deutsche Bundesbank, we apply the generalised method of moments (GMM) within a dynamic panel data framework. The results largely confirm the findings for other countries, but show considerable differences between the three German banking groups. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 03-66.

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    Date of creation: 2003
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    Handle: RePEc:zbw:zewdip:1677

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    Related research

    Keywords: Bank capital; portfolio risk; banking regulation; panel data; GMM;

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    References

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    Cited by:
    1. Sreejata Banerjee, 2012. "Basel I and Basel II Compliance: Issues for Banks in India," Working Papers 2012-068, Madras School of Economics,Chennai,India.
    2. Norden, Lars & Weber, Martin, 2005. "Funding Modes of German Banks: Structural Changes and its Implications," CEPR Discussion Papers 5027, C.E.P.R. Discussion Papers.
    3. Isaac Alfon & Isabel Argimón & Patricia Bascuñana-Ambrós, 2005. "How individual capital requirements affect capital ratios in UK banks and building societies," Banco de Espa�a Working Papers 0515, Banco de Espa�a.

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