Work

The effect of bank capital requirements on bank off-balance sheet financial innovations

Year: 1995

Type: article

Abstract: A popular explanation for the explosive growth in banks' off-balance sheet (OBS) activities is the avoidance of capital adequacy requirements. Several studies have examined this and other motivations behind bank OBS activities with mixed results. We shed further light on the issue of OBS growth by modelling OBS products as financial innovations subject to a logistic diffusion adoption pattern. Our data also allows us to investigate the impact of important changes in capital adequacy regulations on OBS diffusion rates. We find that changes in capital requirements have had no consistent impact on the speed of diffusion across OBS activities.

Source: Journal of Banking & Finance

DOI: 10.1016/0378-4266(94)00145-s

Authors: Julapa Jagtiani, Anthony Saunders, Gregory Udell

Institutions: Baruch College, City University of New York, New York University

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,340

Funder: Syracuse University