Arbeitspapier

Bank recapitalizations and lending: A little is not enough

This paper analyzes the effect of bank recapitalizations on lending, funding and asset quality of European banks between 2000 and 2013. Controlling for market implied capital shortfall of banks, we find that banks that receive a sufficiently large recapitalization increase lending, attract more deposits and clean up their balance sheets. In contrast, banks that receive a small recapitalization relative to their capital shortfall reduce lending and shrink assets. These results suggest recapitalizations need to be large enough to lead to new lending.

ISBN
978-92-95081-43-7
Language
Englisch

Bibliographic citation
Series: ESRB Working Paper Series ; No. 16

Classification
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financial Institutions and Services: Government Policy and Regulation
Subject
Bank recapitalization
lending
zombie banks
bank restructuring
banking crisis

Event
Geistige Schöpfung
(who)
Homar, Timotej
Event
Veröffentlichung
(who)
European Systemic Risk Board (ESRB), European System of Financial Supervision
(where)
Frankfurt a. M.
(when)
2016

DOI
doi:10.2849/804593
Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Homar, Timotej
  • European Systemic Risk Board (ESRB), European System of Financial Supervision

Time of origin

  • 2016

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