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Capital requirements and shifts in commercial bank portfolios

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  • Joseph G. Haubrich
  • Paul Wachtel

Abstract

Since 1989, U.S. commercial banks have shifted their portfolios away from commercial loans toward government securities. Using data for individual banks, the authors document this shift and test for whether it can be attributed to the imposition of risk-based capital requirements. Their results indicate that these requirements may indeed account for part of the portfolio shift.

Suggested Citation

  • Joseph G. Haubrich & Paul Wachtel, 1993. "Capital requirements and shifts in commercial bank portfolios," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 2-15.
  • Handle: RePEc:fip:fedcer:y:1993:i:qiii:p:2-15:n:v.29no.3
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    References listed on IDEAS

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    3. Johannes, James M & Rasche, Robert H, 1981. "Can the Reserves Approach to Monetary Control Really Work?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 13(3), pages 298-313, August.
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    5. Bernanke, Ben S & Blinder, Alan S, 1992. "The Federal Funds Rate and the Channels of Monetary Transmission," American Economic Review, American Economic Association, vol. 82(4), pages 901-921, September.
    6. Tinsley, Peter A, et al, 1982. "Policy Robustness: Specification and Simulation of a Monthly Money Market Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(4), pages 829-856, November.
    7. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    8. Leeper, Eric M. & Gordon, David B., 1992. "In search of the liquidity effect," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 341-369, June.
    9. Poole, William, 1982. "Federal Reserve Operating Procedures: A Survey and Evaluation of the Historical Record since October 1979," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(4), pages 575-596, November.
    10. Marvin Goodfriend & Gary S. Anderson & Anil K. Kashyap & George R. Moore & Richard D. Porter, 1984. "A weekly perfect foresight model of the nonborrowed reserve operating procedure," Working Paper 84-04, Federal Reserve Bank of Richmond.
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    12. Stephen H. Axilrod, 1982. "Monetary policy, money supply, and the Federal Reserve's operating procedures," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jan, pages 13-24.
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