One size fits all? The differential impact of parent capital on bank failures

Document Type

Article

Publication Date

6-1-2019

Abstract

Recent regulations increased minimum capital standards for bank holding companies. We test the effectiveness of this action in preventing bank failures during the sub-prime mortgage crisis. We find that while holding company capital is the most influential variable in the failures of banks affiliated with multi-bank holding companies, this is not the case for banks affiliated with a one-bank holding company. For these banks, the bank's own characteristics are more influential than group capital, meaning the established standards may not be universally effective.

Publication Title

Finance Research Letters

Volume

29

First Page

136

Last Page

140

Digital Object Identifier (DOI)

10.1016/j.frl.2019.03.006

ISSN

15446123

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