How have banks adjusted to higher capital requirements?

Spurred by stronger regulatory requirements, banks have steadily increased their capital ratios since the financial crisis. For a sample of 82 large global banks from advanced and emerging economies, retained earnings accounted for the bulk of the increase in risk-weighted capital ratios over the period 2009-12, with reductions in risk weights playing a lesser role. On average, banks continued to expand their lending, though lending growth was slower among advanced economy banks from Europe. Lower dividend payouts and wider lending spreads contributed to banks' ability to use retained earnings to build capital. Banks that came out of the crisis with higher capital ratios and stronger profitability were able to expand lending more.