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Working Paper

Capital Requirements and Optimal Bank Portfolios: A Reexamination

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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.
08.01.1988ISSN 2573-7953 WP 88-06

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Osterberg, William P., and James B. Thomson. 1988. “Capital Requirements and Optimal Bank Portfolios: A Reexamination.” Federal Reserve Bank of Cleveland, Working Paper No. 88-06.