Hidden effects of bank recapitalizations

Elena Beccalli, Pascal Rene' Frantz, Pascal Frantz

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

1 Citazioni (Scopus)

Abstract

Given the importance of capital regulation in the banking industry, how and why a bank’s behavior reacts to a recapitalization has profound consequences. To this end, we investigate the effects of 306 seasoned equity offerings (SEOs) conducted by listed European banks between 2002 and 2014. We use propen- sity score matching and find that SEOs lead to asset expansion as opposed to any deleveraging. Further, we find a decrease in lending in the short-term followed by a subsequent increase, a reduction in prof- itability, and an increase in systemic risk. Regulators might not have fully considered this last negative externality when they imposed the tougher Basel III capital requirements. The effects of SEOs strongly depend on the reasons behind the recapitalizations.
Lingua originaleEnglish
pagine (da-a)297-314
Numero di pagine18
RivistaJOURNAL OF BANKING & FINANCE
Volume2018
DOI
Stato di pubblicazionePubblicato - 2018

Keywords

  • banche
  • banks
  • recapitalizations
  • ricapitalizzazioni

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