The effectiveness of regulatory capital requirements prior to the onset of the financial crisis†
Publication type
Journal articlePublication Year
2015Journal
International Review of FinancePublication Volume
15Publication Issue
2Publication Begin page
199Publication End page
221
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Show full item recordAbstract
We extend the literature on the role of capital requirements as a regulatory tool by developing a continuous measure of the degree of regulatory pressure and by examining data on US commercial banks during the economic upturn that preceded the 2007-2009 financial crisis. Our findings indicate the inability of regulatory pressure to force banks to build capital buffers during the economic upturn that preceded the crisis. These findings are consistent with the view that banks entered the crisis with inadequate levels of capital. Our findings support the endeavors of regulators in explicitly demanding capital buffers in their new regulatory framework.Knowledge Domain/Industry
Accounting & FinanceSpecial Industries : Financial Services Management
ae974a485f413a2113503eed53cd6c53
10.1111/irfi.12046