We contribute to the empirical literature on the impact of shocks to bank capital in the euro area by estimating a … economy, namely a demand shock and a shock to bank capital. The main findings of the paper are as follows: i) Impulse …-response analysis shows that in response to a shock to bank capital, banks boost capital ratios by reducing their relative exposure to …

explain about two-thirds of the variation of bank capitalization over the business cycle. We estimate that provisioning …

explain about two-thirds of the variation of bank capitalization over the business cycle. We estimate that provisioning …