Abstract | Keywords | Export | Availability | Bookmark

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Using a multi-country panel of banks, we study whether better capitalized banks experienced higher stock returns during the financial crisis. We differentiate among various types of capital ratios: the Basel risk-adjusted ratio; the leverage ratio; the Tier I and Tier II ratios; and the tangible equity ratio. We find several results: (i) before the crisis, differences in capital did not have much impact on stock returns; (ii) during the crisis, a stronger capital position was associated with better stock market performance, most markedly for larger banks; (iii) the relationship between stock returns and capital is stronger when capital is measured by the leverage ratio rather than the risk-adjusted capital ratio; (iv) higher quality forms of capital, such as Tier 1 capital and tangible common equity, were more relevant.

Bank capital. --- Banques Capital. --- Financial crises. --- Banks and Banking --- Financial Risk Management --- Investments: Stocks --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Crises --- General Financial Markets: General (includes Measurement and Data) --- Banking --- Investment & securities --- Financial services law & regulation --- Economic & financial crises & disasters --- Finance --- Stocks --- Financial crises --- Capital adequacy requirements --- Loan loss provisions --- Financial institutions --- Financial regulation and supervision --- Stock markets --- Financial markets --- Banks and banking --- Asset requirements --- State supervision --- Stock exchanges --- United States