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Bank Capital Requirements and the Riskiness of Banks: A Review

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A study of the impact of capital requirements on bank portfolio decisions, showing that the variance of earnings and the incentive to increase leverage are reduced with risk- and leverage-related deposit rates, and that the impact of increased capital requirements on portfolio behavior is generally ambiguous.


Suggested citation: Osterberg, William, and James Thomson. “Bank Capital Requirements and the Riskiness of Banks: A Review,” Federal Reserve Bank of Cleveland, Economic Review, vol. 25, no. 1, pp. 10-17, 01.01.1989.

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