indicate that a 1 percentage point increase in a bank's equity-to-assets ratio lowers its cost of equity by about 18 basis …

This paper studies the transmission of bank capital shocks to loan supply in Indonesia. A series of theoretically … aggregate lending. Likewise, the effects of bank recapitalization on loan growth depend on banks' starting capital positions and …

An important role for bank capital is that of a buffer against unexpected losses. As uncertainty about these losses … increases, the theory predicts an increase in the optimal level of bank capital. This paper investigates this implication … reduction in bank capital ratios of slightly over 1 percentage point. However, I also find suggestive evidence that the …

This paper presents new evidence on the empirical relationship between bank solvency and funding costs. Building on a … 100 bps increase in regulatory capital ratios is associated with a decrease of bank funding costs of about 105 bps. A 100 … test could have led to a significant underestimation of the impact of stress on bank capital ratios …

Rules of thumb can be useful in undertaking quick, robust, and readily interpretable bank stress tests. Such rules of …