Drawing on recently disclosed information on the Pillar 2 capital requirements of banks directly supervised by the ECB, we find that bank-specific capital requirements are mostly driven by business model and profitability, credit risk, and internal governance and risk management issues....

We model 1927-1997 U.S. business failure rates using a time series approach based on unobserved components. Clear evidence is found of cyclical behavior in default rates. The cycle has a period of around 10 years. We also detect longer term movements in default probabilities and default...

Higher capital requirements of Basel III are criticized for increasing the cost of capital for banks. Against this backdrop, Admati et al. (2013) argue that higher equity ratios are not expensive because the required return on equity will decrease. Previous studies have empirically tested this...

This paper considers how increases in individual banks' capital requirements affect borrowing and growth at the firm-level. Using a novel data set of regulatory injunctions to Danish banks' individual capital requirements, I find evidence that an increase to the minimum capital requirement of a...