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The contribution of bank regulation and fair value accounting to procyclical leverage

Abstract:

Our analytical description of how banks’ responses to asset price changes can result in procyclical leverage reveals that for banks with a binding regulatory leverage constraint, absent differences in regulatory risk weights across assets, procyclical leverage does not occur. For banks without a binding constraint, fair value and bank regulation both can contribute to procyclical leverage. Empirical findings based on a large sample of US commercial banks reveal that bank regulation explains p...

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Publication status:
Published
Peer review status:
Peer reviewed
Version:
Publisher's version

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Publisher copy:
10.1007/s11142-017-9410-6

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Department:
Green Templeton College
Landsman, WR More by this author
Cambridge Endowment for Research in Finance More from this funder
Publisher:
Springer Publisher's website
Journal:
Review of Accounting Studies Journal website
Publication date:
2017-06-05
Acceptance date:
2017-03-06
DOI:
EISSN:
1573-7136
ISSN:
1380-6653
Pubs id:
pubs:684777
URN:
uri:60dc3e37-6674-4039-b776-2e7e442197b2
UUID:
uuid:60dc3e37-6674-4039-b776-2e7e442197b2
Local pid:
pubs:684777

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