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Abstract: A Portfolio Model for Identifying Banks Operating under Capital Constraints
Published online by Cambridge University Press: 19 October 2009
Extract
The paper presents evidence suggesting that banks with very low and very high capital positions respond to interest rate changes differently from other banks. The concept of a capital constraint is introduced to explain this phenomenon. The hypothesis is that banks with a binding capital constraint should exhibit different asset management decisions from those banks which are unconstrained. The regression results indicate that low-capital banks for the years 1973-74 and 1974-75 did not respond to earnings in an economic fashion.
- Type
- Abstracts of Conference Papers: Financial Institutions
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- Copyright © School of Business Administration, University of Washington 1977