provisions tend to be more procyclical at larger and better capitalized banks. The procyclicality of loan loss provisions can … explain about two-thirds of the variation of bank capitalization over the business cycle. We estimate that provisioning … procyclicality in the euro area is about twice as large as in other advanced economies. This difference reflects a larger …

that, in general, there was a dependency between banks' capital adequacy and loan growth in the euro area for the observed …

empirical literature, i.e. the pro-cyclicality of bank profitability and the counter-cyclical response of firm default rates and …We develop a stylized DSGE model in which banks face capital regulation and their loan portfolios are subject to non … conditions, credit default and bank capitalization for the transmission of macroeconomic shocks. We fit the model to euro area …