The effect of private investments on banks' capital requirements

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dc.contributor.author Arayssi, Mahmoud en_US
dc.date.accessioned 2016-05-19T12:54:20Z en_US
dc.date.available 2016-05-19T12:54:20Z en_US
dc.date.copyright 2016 en_US
dc.date.issued 2016-05-19
dc.identifier.issn 1351-847X en_US
dc.identifier.uri http://hdl.handle.net/10725/3851 en_US
dc.description.abstract 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. en_US
dc.language.iso en en_US
dc.title The effect of private investments on banks' capital requirements en_US
dc.type Article en_US
dc.description.version Published en_US
dc.author.school SOB en_US
dc.author.idnumber 199629330 en_US
dc.author.department Department of Finance and Accounting (FINA) en_US
dc.description.embargo N/A en_US
dc.relation.journal The European Journal of Finance en_US
dc.journal.volume 22 en_US
dc.journal.issue 15 en_US
dc.article.pages 1580-1595 en_US
dc.keywords Private equity en_US
dc.keywords Captive funds en_US
dc.keywords Banks en_US
dc.keywords Capital requirements en_US
dc.keywords leveraged ratio restriction en_US
dc.keywords Basel II en_US
dc.keywords Basel III en_US
dc.keywords G21 en_US
dc.keywords G28 en_US
dc.identifier.doi http://dx.doi.org/10.1080/1351847X.2015.1049283 en_US
dc.identifier.ctation Arayssi, M. (2016). The effect of private investments on banks' capital requirements. The European Journal of Finance, 22(15), 1580-1595. en_US
dc.author.email mahmoud.araissi@lau.edu.lb en_US
dc.identifier.tou http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php en_US
dc.identifier.url http://www.tandfonline.com/doi/abs/10.1080/1351847X.2015.1049283 en_US
dc.orcid.id https://orcid.org/0000-0002-1816-8835 en_US

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