Assistant Professor of Finance/Economics, Boston University School of Management. This paper was originally written as part of a doctoral dissertation at M.I.T. Helpful suggestions from Robert McDonald, Richard Schmalensee, Larry Summers, and Edward J. Kane are gratefully acknowledged.
The Bank Capital Decision: A Time Series-Cross Section Analysis
Article first published online: 30 APR 2012
1983 The American Finance Association
The Journal of Finance
Volume 38, Issue 4, pages 1217–1232, September 1983
How to Cite
MARCUS, A. J. (1983), The Bank Capital Decision: A Time Series-Cross Section Analysis. The Journal of Finance, 38: 1217–1232. doi: 10.1111/j.1540-6261.1983.tb02292.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This paper seeks to explain the dramatic decline in capital to asset ratios in U.S. commercial banks during the last two decades. It is hypothesized that the rise in nominal interest rates during this period might have contributed substantially to the fall in capital ratios. Time series-cross section estimation supports the hypothesis regarding the interest rate.