IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-04240196.html
   My bibliography  Save this paper

Do banks adjust their capital when they face liquidity shortages? Evidence from U.S. commercial banks

Author

Listed:
  • Thierno Amadou Barry

    (Université de Limoges, LAPE, 5 rue Félix Eboué, 87031 Limoges Cedex, France)

  • Alassane Diabaté

    (Université de Limoges, LAPE, 5 rue Félix Eboué, 87031 Limoges Cedex, France)

  • Amine Tarazi

    (Université de Limoges, LAPE, 5 rue Félix Eboué, 87031 Limoges Cedex, France)

Abstract

We investigate how small and large banks behave when they face liquidity shortages. Our findings reveal that only small banks increase their capital ratios during episodes of liquidity shortages. They do so by downsizing but also by holding less risky assets and by reducing their lending. Furthermore, the increase in capital ratios is higher for small banks which are more reliant on market liquidity and small banks operating below their target capital ratio. On the whole, our findings show that small banks operate prudently whereas large banks are less concerned. Our work has strong implications for bank regulation and supervision.

Suggested Citation

  • Thierno Amadou Barry & Alassane Diabaté & Amine Tarazi, 2023. "Do banks adjust their capital when they face liquidity shortages? Evidence from U.S. commercial banks," Working Papers hal-04240196, HAL.
    • Handle: RePEc:hal:wpaper:hal-04240196
    Note: View the original document on HAL open archive server: https://hal.science/hal-04240196
    as

    Download full text from publisher

    File URL: https://hal.science/hal-04240196/document
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-04240196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.