Journal Article

Can we explain banks' capital structures?

Abstract: Bank capital has been much in the news during the recent financial crisis. In 2008 and 2009 the U.S. government injected $235 billion of capital into the banking system as part of the Troubled Asset Relief Program (TARP). In 2009, bank regulators carried out a full-scale evaluation of the capital adequacy of 19 large banking organizations, ultimately requiring 10 of these organizations to increase their capital levels. While most commentators agree that regulatory capital levels are too low for large organizations ? especially large organizations that create systemic risks ? financial economists have only recently been paying attention to what factors actually govern banks? capital choices. In ?Can We Explain Banks? Capital Structures?,? Mitchell Berlin discusses how understanding bank capital decisions over the 20-year period prior to the recent crisis can provide insights that may help us to evaluate reform proposals.

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Business Review

Publication Date: 2011

Issue: Q2

Pages: 1-11