Dick-Nielsen, Jens; Gao, Zhuolu; Lando, David - 2023
Financial regulation has led banks to increase their equity ratios. Yet, several studies find that this has not led to … a decrease in bank equity risk. We show theoretically, that keeping less capital in excess of the minimum capital … requirement can outweigh the risk-reducing effect on equity of increased total capitalization. Empirically, we find that excess …