RT info:eu-repo/semantics/article
T1 Is bank diversification a linking channel between regulatory capital and bank value?
A1 Velasco González, María Del Pilar
K1 Banking industry
K1 Industria bancaria
K1 Regulatory capital
K1 Capital regulatorio
K1 Firm value
K1 Valor de empresa
AB This study investigates the interrelationship between bank regulatory capital and bank diversification. We argue that regulatory capital might act as a substitutive mechanism of diversification to alleviate a bank's default risk. As a result, regulatory capital is likely to discourage firms from excessive diversification, which might in turn indirectly improve bank value. Using a sample of listed banks in developed countries from 2011 to 2017, we find that total regulatory capital is inversely associated with bank diversification. Narrower regulatory capital ratios only have a significant association with income-based but not with asset-based diversification. Our results also reveal an indirect effect of regulatory capital on bank value mediated by bank diversification (i.e. indirect-only mediation). Overall, our study provides novel insights into the complementarity of the institutional and strategic domains so as to understand the far-reaching implications of regulation reforms for the strategic behaviour of banking companies.
PB Elsevier
SN 0890-8389
YR 2021
FD 2021
LK https://uvadoc.uva.es/handle/10324/51668
UL https://uvadoc.uva.es/handle/10324/51668
LA eng
NO The British Accounting Review, Julio 2022, vol. 54, n. 4, 101070
NO Producción Científica
DS UVaDOC
RD 22-dic-2024