The Impact of Capital on Lending in Economic Downturns and Investor Protection - the Case of Large EU Bank

• Autorzy: Małgorzata Olszak , Mateusz Pipień , Iwona Kowalska , Sylwia Roszkowska
• Języki publikacji: EN

Abstrakty

EN

This paper attempts to find out whether better quality of investor protection matters for the effect of capital ratio on loan growth of large EU banks in 1996-2011. We focus on several measures of the quality of investor protection with a proven track record in the banking literature, i.e.: anti-self-dealing index, ex-antecontrol and ex-post-control of anti-self-dealing indices, and creditor protection rights index. Our results show that better investor protection increases the procyclical impact of capital on lending in the sample of banks reporting unconsolidated data. This is consistent with the view that better shareholders rights protection induces bank borrowers to take more loans and to engage in more risk-taking, in particular during economic booms, which results in greater sensitivity of bank lending to capital ratios in economic downturns. The opposite effect is found in the sample of banks reporting consolidated data. This effect is consistent with the view that better minority shareholders protection may reduce risk-taking incentives of large banks and result in better risk management of credit portfolio (and other investments of such banks).(original abstract)

Słowa kluczowe

EN

Protection of investors rights; Bank capital; Procyclicality

PL

Ochrona praw inwestorów; Kapitał bankowy; Procykliczność

• Czasopismo: University of Warsaw Faculty of Management Working Paper Series
• Rocznik: 2015
• Numer: nr 6
• Strony: 33

Twórcy

autor

Małgorzata Olszak

• University of Warsaw, Poland

autor

Mateusz Pipień

• Cracow University of Economics, Poland

autor

Iwona Kowalska

• University of Warsaw, Poland

autor

Sylwia Roszkowska

• University of Lodz, Poland; National Bank of Poland

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