The effect of private investments on banks' capital requirements
A simple leverage ratio restriction is not efficient because it does not discriminate between risky and safe banks. We use a structural and comprehensive model of the firm's asset growth to describe the equity buy-out portfolios' stylized facts for two types of banks. We derive a leverage...
محفوظ في:
| المؤلف الرئيسي: | |
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| التنسيق: | article |
| منشور في: |
2016
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| الوصول للمادة أونلاين: | http://hdl.handle.net/10725/3851 http://dx.doi.org/10.1080/1351847X.2015.1049283 http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php http://www.tandfonline.com/doi/abs/10.1080/1351847X.2015.1049283 |
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| _version_ | 1864513462434004992 |
|---|---|
| author | Arayssi, Mahmoud |
| author_facet | Arayssi, Mahmoud |
| author_role | author |
| dc.creator.none.fl_str_mv | Arayssi, Mahmoud |
| dc.date.none.fl_str_mv | 2016-05-19T12:54:20Z 2016-05-19T12:54:20Z 2016 2016-05-19 |
| dc.identifier.none.fl_str_mv | 1351-847X http://hdl.handle.net/10725/3851 http://dx.doi.org/10.1080/1351847X.2015.1049283 Arayssi, M. (2016). The effect of private investments on banks' capital requirements. The European Journal of Finance, 22(15), 1580-1595. http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php http://www.tandfonline.com/doi/abs/10.1080/1351847X.2015.1049283 |
| dc.language.none.fl_str_mv | en |
| dc.relation.none.fl_str_mv | The European Journal of Finance |
| dc.rights.*.fl_str_mv | info:eu-repo/semantics/openAccess |
| dc.title.none.fl_str_mv | The effect of private investments on banks' capital requirements |
| dc.type.none.fl_str_mv | Article info:eu-repo/semantics/publishedVersion info:eu-repo/semantics/article |
| description | A simple leverage ratio restriction is not efficient because it does not discriminate between risky and safe banks. We use a structural and comprehensive model of the firm's asset growth to describe the equity buy-out portfolios' stylized facts for two types of banks. We derive a leverage ratio that depends on the level of risky investments, and balances between the spread on such investments, the cost of capital and the overall power of the supervisor to enforce the capital requirements. This method is more transparent and requires fewer parameters than other commonly used methods. We obtain an incentive-compatible constraint on banks to carry the minimal adequate amount of capital. This constraint enhances the supervisors' ability to enforce the rules ex post, and provide banks with a further incentive to reveal their risk type truthfully. |
| eu_rights_str_mv | openAccess |
| format | article |
| id | LAURepo_8454d2dca033d2f2eee1c3446caefaa2 |
| identifier_str_mv | 1351-847X Arayssi, M. (2016). The effect of private investments on banks' capital requirements. The European Journal of Finance, 22(15), 1580-1595. |
| language_invalid_str_mv | en |
| network_acronym_str | LAURepo |
| network_name_str | Lebanese American University repository |
| oai_identifier_str | oai:laur.lau.edu.lb:10725/3851 |
| publishDate | 2016 |
| repository.mail.fl_str_mv | |
| repository.name.fl_str_mv | |
| repository_id_str | |
| spelling | The effect of private investments on banks' capital requirementsArayssi, MahmoudA simple leverage ratio restriction is not efficient because it does not discriminate between risky and safe banks. We use a structural and comprehensive model of the firm's asset growth to describe the equity buy-out portfolios' stylized facts for two types of banks. We derive a leverage ratio that depends on the level of risky investments, and balances between the spread on such investments, the cost of capital and the overall power of the supervisor to enforce the capital requirements. This method is more transparent and requires fewer parameters than other commonly used methods. We obtain an incentive-compatible constraint on banks to carry the minimal adequate amount of capital. This constraint enhances the supervisors' ability to enforce the rules ex post, and provide banks with a further incentive to reveal their risk type truthfully.PublishedN/A2016-05-19T12:54:20Z2016-05-19T12:54:20Z20162016-05-19Articleinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/article1351-847Xhttp://hdl.handle.net/10725/3851http://dx.doi.org/10.1080/1351847X.2015.1049283Arayssi, M. (2016). The effect of private investments on banks' capital requirements. The European Journal of Finance, 22(15), 1580-1595.http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.phphttp://www.tandfonline.com/doi/abs/10.1080/1351847X.2015.1049283enThe European Journal of Financeinfo:eu-repo/semantics/openAccessoai:laur.lau.edu.lb:10725/38512021-03-19T09:10:05Z |
| spellingShingle | The effect of private investments on banks' capital requirements Arayssi, Mahmoud |
| status_str | publishedVersion |
| title | The effect of private investments on banks' capital requirements |
| title_full | The effect of private investments on banks' capital requirements |
| title_fullStr | The effect of private investments on banks' capital requirements |
| title_full_unstemmed | The effect of private investments on banks' capital requirements |
| title_short | The effect of private investments on banks' capital requirements |
| title_sort | The effect of private investments on banks' capital requirements |
| url | http://hdl.handle.net/10725/3851 http://dx.doi.org/10.1080/1351847X.2015.1049283 http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php http://www.tandfonline.com/doi/abs/10.1080/1351847X.2015.1049283 |