Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19740
Authors: 
Stolz, Stéphanie
Wedow, Michael
Year of Publication: 
2005
Series/Report no.: 
Discussion Paper, Series 2: Banking and Financial Supervision 2005,07
Abstract: 
This paper analyzes the effect of the business cycle on the regulatory capital buffer of German savings and cooperative banks in the period 1993-2003. The capital buffer is found to fluctuate anticyclically over the business cycle. The fluctuation is stronger for savings banks than for cooperative banks, as, for savings banks, risk-weighted assets fluctuate more strongly with the business cycle. Further, low-capitalized banks do not catch up with their wellcapitalized peers. The gap between low-capitalized and well capitalized banks even widened over the observation period. Finally, low-capitalized banks do not decrease risk-weighted assets in a business cycle downturn by more than well-capitalized banks. This finding seems to imply that their low capitalization does not force them to retreat from lending.
Subjects: 
Capital Regulation
Bank Capital
Business Cycle Fluctuations
JEL: 
G21
G28
Document Type: 
Working Paper

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