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Capital Requirements and Optimal Bank Portfolios: A Reexamination


An examination of the impact of increased capital requirements on bank portfolio behavior, finding that although the variance of earnings and the incentive to increase leverage are reduced with risk- and leverage-related interest rates, the impact of increased capital requirements on portfolio behavior is generally ambiguous.


Suggested citation: Osterberg, William, 1988. “Capital Requirements and Optimal Bank Portfolios: A Reexamination,” Federal Reserve Bank of Cleveland, Working Paper no. 88-06.

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