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

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  • Ozdemir, Nilufer
  • Triplett, Russell
  • Altinoz, Cuneyt

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.

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  • Ozdemir, Nilufer & Triplett, Russell & Altinoz, Cuneyt, 2019. "One size fits all? The differential impact of parent capital on bank failures," Finance Research Letters, Elsevier, vol. 29(C), pages 136-140.
    • Handle: RePEc:eee:finlet:v:29:y:2019:i:c:p:136-140
    DOI: 10.1016/j.frl.2019.03.006
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    References listed on IDEAS

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    Cited by:

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    3. Iwanicz-Drozdowska, Małgorzata & Witkowski, Bartosz, 2022. "Regulation and supervision of the European banking industry. Does one size fit all?," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 113-129.

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    More about this item

    Keywords

    Bank failure; Bank holding company; Financial crisis; Bank regulation; G01; G21; G28; G33;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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