The paper sought to explore the role of bank capital in mitigating credit risk and promoting financial stability. To … Regression Model was employed using annual bank-level data from 2001-2020 for 37 banks, to examine the effect of bank capital on … the downward trend from 2011 and instability margins since 2016. The findings also reveal that bank capital, lowers credit …

reallocates mostly towards safer producers. Lending standards propagate bank capital shortfalls through labor misallocation … increasing. Finally, with endogenous lending standards, first-moment bank capital shocks look like second-moment shocks. …