The Costs of Bank Equity Offerings in Response to Strengthened Capital Regulation

2014 ◽  
Author(s):  
Katsutoshi Shimizu ◽  
Peng Xu
Keyword(s):  
Capital Regulation ◽  
Equity Offerings ◽  
Bank Equity

Costs of Bank Equity Offerings in Response to Strengthened Capital Regulation

2015 ◽  
Author(s):  
Katsutoshi Shimizu ◽  
Peng Xu
Keyword(s):  
Capital Regulation ◽  
Equity Offerings ◽  
Bank Equity

Costs of Bank Equity Offerings in Response to Strengthened Capital Regulation

2014 ◽  
Author(s):  
Katsutoshi Shimizu ◽  
Peng Xu
Keyword(s):  
Capital Regulation ◽  
Equity Offerings ◽  
Bank Equity

scholarly journals On the money creation approach to banking

2021 ◽  
Author(s):  
Salomon Faure ◽  
Hans Gersbach
Keyword(s):  
Monetary Policy ◽  
Commercial Banks ◽  
Central Banks ◽  
Capital Regulation ◽  
Bank Deposits ◽  
Central Bank Money ◽  
Money Creation ◽  
Asset Purchases ◽  
Bank Equity ◽  
Bank Money

AbstractWe study today’s two-tier money creation and destruction system: Commercial banks create bank deposits (privately created money) through loans to firms or asset purchases from the private sector. Bank deposits are destroyed when households buy bank equity or when firms repay loans. Central banks create electronic central bank money (publicly created money or reserves) through loans to commercial banks. In a simple general equilibrium setting, we show that symmetric equilibria yield the first-best level of money creation and lending when prices are flexible, regardless of monetary policy and capital regulation. When prices are rigid, we identify the circumstances in which money creation is excessive or breaks down and the ones in which an adequate combination of monetary policy and capital regulation can restore efficiency. Finally, we provide a series of extensions and generalizations of the results.

Optimal Bank Interest Margin with Synergy Banking under Capital Regulation and Deposit Insurance: A Swaption Approach

2011 ◽  
Vol 14 (02) ◽  
pp. 327-346 ◽  
Author(s):  
Chuen-Ping Chang ◽  
Jyh-Horng Lin
Keyword(s):  
Mutual Fund ◽  
Opportunity Cost ◽  
Deposit Insurance ◽  
Retail Banking ◽  
Capital Regulation ◽  
Call Option ◽  
Risky Assets ◽  
Bank Equity ◽  
Model Bank ◽  
Interest Margin

The main purpose of this paper is to model bank spread behavior under capital regulation and deposit insurance. Comparative static results show that an increase in the capital-to-deposits ratio or the deposit insurance decreases the bank's interest margin or spread. It is also shown that an increase in the equity that implies its opportunity cost of the coupon rate on the fixed leg decreases the margin. Previous research on market-based evaluations of bank equity has modeled the bank as a narrowing banking firm with risky assets and insured liabilities. The equity of the bank is viewed as a call option on its risky assets. No attempt was made to explicitly analyze a synergy between lending and deposit-taking, and, in our view, the equity of the bank is viewed as a swap option on coupon bonds. Synergy banking, particularly in the return to retail banking, is important in distinguishing banks from other lenders such as finance companies and mutual fund institutions. These other lenders call for the breaking up of banks into separate lending and deposit-taking operations, respectively. Our findings provide an insight for synergy banking operations concerning regulated bank spread behavior in the return to retail banking.

scholarly journals Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is not Expensive

2011 ◽  
Author(s):  
Anat R. Admati ◽  
Peter M. DeMarzo ◽  
Martin F. Hellwig ◽  
Paul C. Pfleiderer
Keyword(s):  
Capital Regulation ◽  
Bank Equity

scholarly journals Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Socially Expensive

2013 ◽  
Author(s):  
Anat R. Admati ◽  
Peter M. DeMarzo ◽  
Martin F. Hellwig ◽  
Paul C. Pfleiderer
Keyword(s):  
Capital Regulation ◽  
Bank Equity

scholarly journals The Impact on IPO Assurance Fees of Commercial Bank Entry into the Equity Underwriting Market

2000 ◽  
Vol 19 (s-1) ◽  
pp. 23-35 ◽  
Author(s):  
Neil L. Fargher ◽  
L. Paige Fields ◽  
Michael S. Wilkins
Keyword(s):  
Commercial Bank ◽  
Initial Public Offering ◽  
Commercial Banks ◽  
The United States ◽  
Litigation Risk ◽  
Equity Offerings ◽  
Accounting Firms ◽  
Bank Equity ◽  
Public Offering ◽  
The Impact

Changes in the provisions of the United States Banking Act of 1933 have allowed the entry of commercial banks into the initial public offering (IPO) underwriting market. In this paper, we examine the effect of commercial bank equity underwriting on the fees paid to auditors. We predict that IPO assurance fees will be higher for equity offerings underwritten by commercial banks than for offerings handled by traditional underwriters because (1) commercial banks are relatively inexperienced in bringing firms public, requiring additional assistance from accounting firms in the IPO process; (2) new entrants into the underwriting market may manage lower quality issues that require additional assurance services; and/or (3) since commercial banks have greater resources than do traditional investment banks, they are likely to be exposed to greater litigation risk, providing incentives for commercial bank underwriters to ensure that the IPO firm purchases greater assurance from the auditor. However, we expect fees to decrease if a previous lending relationship existed between the commercial bank and its client. Our findings, based on a sample of issues brought to market between 1991 and 1997, support these expectations.

scholarly journals Do Banks Issue Equity When They Are Poorly Capitalized?

2016 ◽  
Vol 51 (5) ◽  
pp. 1575-1609 ◽  
Author(s):  
Valeriya Dinger ◽  
Francesco Vallascas
Keyword(s):  
Theoretical Prediction ◽  
Seasoned Equity Offerings ◽  
Market Discipline ◽  
Capital Regulation ◽  
Equity Offerings ◽  
Market Mechanisms ◽  
Debt Overhang ◽  
Lower Likelihood ◽  
Primary Driver ◽  
Market Pressures

Debt overhang and moral hazard predict that poorly capitalized banks have a lower likelihood to issue equity, while the presence of regulatory and market pressures posits an opposite theoretical prediction. By using an international sample of bank seasoned equity offerings (SEOs), we show that the likelihood of issuing SEOs is higher in poorly capitalized banks and that such banks prefer SEOs to alternative capitalization strategies. A series of tests exploring the variation of capital regulation and market discipline show that market mechanisms rather than capital regulation are the primary driver of the decision to issue by poorly capitalized banks.

The Differential Attributes of Information Asymmetry and Accrual Quality on the Seasoned Equity Offerings

2020 ◽  
Vol 29 (1) ◽  
pp. 163-200
Author(s):  
Mi Suk Kim ◽  
Hark Ppin Yhim
Keyword(s):  
Information Asymmetry ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Accrual Quality

Seasoned Equity Offerings, Corporate Governance, and Investments

CFA Digest ◽  
2014 ◽  
Vol 44 (10) ◽  
Author(s):  
Gregory G. Gocek
Keyword(s):  
Corporate Governance ◽  
Seasoned Equity Offerings ◽  
Equity Offerings
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