TY - BOOK ID - 84783413 TI - The Role of Bank Capital in Bank Holding Companies’ Decisions AU - Barajas, Adolfo. AU - Cosimano, Thomas. AU - Hakura, Dalia. AU - Roelands, Sebastian. PY - 2015 SN - 1498348181 161635934X PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Bank capital -- United States -- Econometric models. KW - Bank holding companies -- United States -- Econometric models. KW - Bank loans -- United States -- Econometric models. KW - Banks and Banking KW - Financial Risk Management KW - Money and Monetary Policy KW - Industries: Financial Services KW - Investments: Stocks KW - Banks KW - Depository Institutions KW - Micro Finance Institutions KW - Mortgages KW - Financial Institutions and Services: Government Policy and Regulation KW - Financial Crises KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Pension Funds KW - Non-bank Financial Institutions KW - Financial Instruments KW - Institutional Investors KW - Finance KW - Financial services law & regulation KW - Banking KW - Economic & financial crises & disasters KW - Monetary economics KW - Investment & securities KW - Loans KW - Capital adequacy requirements KW - Financial crises KW - Bank credit KW - Financial institutions KW - Financial regulation and supervision KW - Money KW - Stocks KW - Asset requirements KW - Banks and banking KW - Credit KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783413 AB - This paper examines the role of bank capital in decision-making by bank holding companies (BHCs) in the United States. Following Chami and Cosimano’s (2001) call option approach to bank capital, BHCs optimally choose the amount of capital to insure the bank against becoming capital constrained in the future. We provide empirical support for this model, and find that a higher optimal level of capital leads to higher loan rates. Furthermore, higher loan rates result in lower amounts of lending. Thus, an increase in capital requirements is likely to lead to higher loan rates and a significant reduction in lending. ER -