Regulation, Competition and Bank Risk: Evidence from China

Transcription

1 Asian Business Research; Vol. 2, No. 1, 2017 ISSN E-ISSN Published by July Press Regulaion, Compeiion and Bank Risk: Evidence from China Yachen Liu 1 1 School of Economics, Jinan Universiy, Guangzhou, China Correspondence: Yachen Liu, School of Economics, Jinan Universiy, Guangzhou, China. Tel: Received: March 17, 2017 Acceped: March 28, 2017 Online Published: March 31, 2017 doi: /abr.v2i1.135 URL: hps://doi.org/ /abr.v2i1.135 Absrac This paper uses he semi-annual daa of 16 lised banks from he fourh quarer of 2005 o he second quarer of 2016 as he research sample o sudy he impac of supervision and compeiion on he lised bank's risk in China. The resuls show ha he higher level of bank holdings (capial adequacy raio and core capial adequacy raio) can significanly reduce he combined risk of banks and increase bank sabiliy. Increased liquidiy (liquidiy raio and deposi-loan raio) can reduce bank risk, bu his effec is no significan. The more fierce compeiion among banks (he smaller CR) will no only increase he proporion of weighed risk asses in oal asses, bu also increase he bank's bankrupcy probabiliy and reduce he overall operaing sabiliy of he bank. I is necessary for auhoriies of policy o srenghen supervision of banking indusry, especially he capial adequacy raio and core capial adequacy raio regulaion and keep he compeiion of banks under he appropriae inerval. I is also necessary for regulaors o comply wih he laes regulaions of Basel III o se up more reasonable liquidiy regulaory indicaors o mee liquidiy risk managemen. Keywords: regulaion, compeiion, risk-aking 1. Inroducion Wih hree decade of reform of Chinese banking sysem occurring since he mid-1980s, marke srucure has undergone a fundamenal change, from a highly cenralized and unified srucure in he pas o a sysem dominaed by sae-conrolled, and small and medium-sized commercial banks as he main body wih various shadow banks. A he same ime, Chinese governmen carried ou a series of banking supervision regulaions, including iniially esablishing an inegraed banking supervision sysem wih a capial adequacy raio, liquidiy raio and provision rae, and regarding leverage as he main regulaory ool, which improved he inernal risk of commercial banks conrol mechanism. During he basic compleion of he ineres rae reform, i can be also observed ha no only he managemen level bu also he qualiy of service and performance of commercial banks have improved significanly in he pas 30 years. I is sill necessary for us o sudy wheher he marke srucure reform and change of banking regulaory sysem have improved he performance of micro-eniies and reduced heir risk-aking level. According o he SCP heory framework esablished by Harvard Universiy Mason (1939) and Bain (1959), marke srucure deermines he behavior of he enerprise marke, which will induce a direc and imporan impac on he performance and risk-aking level for companies. However, conrac o srucure conduc performance heory, scholars of insiuional economics, such as Williamson O.E. (1983), poin ha a cerain degree of indusrial concenraion may precisely improve performance of enerprise, hereby in urn enhance he overall performance of indusry, raher han lower business performance. Wha s more, i is ineresing for us o furher research wheher he relaion beween marke srucure regulaed inensely by governmen and performance is consisen wih he srucure efficiency of he SCP framework. Alhough a grea deal of scholars have furher sudied he relaionship beween compeiion srucure under governmen regulaion and performance of banks, here is no a consisen conclusion now. Williams e al. (1994) argues ha srucure efficiency hypohesis well explains Spanish banking sysem. Some scholars have found ha here is a posiive correlaion beween monopoly and bank performance (Keeley, 1990; Molyneux &Thornon, 1992). Berger (1995). Ayadi and Ellouze (2013) argue ha here is a negaive correlaion beween monopoly and bank performance. I is worh menioning ha hese scholars in he measuremen of bank performance basically ake he financial efficiency indicaors ino consideraion wih ignoring he risk conrol indicaors. However, a reasonable evaluaion of bank performance should include no only financial performance of banks bu also he risk conrol indicaors. Based on he above undersanding and previous research resuls, his paper ake risk conrol indicaor ino model 42

2 in order o have a comprehensive evaluaion of bank performance. This paper using 16 lised banks in China, focuses on sudying he influence of banking regulaion and marke srucure on risk-aking behavior of banks, in order o invesigae wheher srucure efficiency performance framework also applies o China. The organizaion of he paper is as follows. The firs secion provides a small sample of recen lieraure abou he relaionship among compeiion, regulaion and bank s performance under he background abou Chinese banking indusry reform wih supervision ools and he SCP heory. The second secion develops a formal model cenering on compeiion srucure, governmen regulaion and risk-aking behavior of banks. The hird secion alks abou he variables ha are used in he empirical analysis, and idenifies he daa sources for each of hese variables. The fourh secion presens he resuls from regressions using fixed effec model. The fifh secion is he conclusions made along wih social and poliical implicaions of he findings. 2. Lieraure and Review On he relaionship beween bank compeiion and bank risk, boh in heoreical analysis and empirical analysis, he academic communiy did no reach a consensus. On he one hand, several scholars agree wih compeiion-vulnerabiliy hypohesis which poins compeiion of banking in fac induce insabiliy. Through consrucing a wo-sage sae preference model wih deposi insurance sysem, Keeley (1990) finds ha increasing of he degree of compeiion in he financial service leads o deregulaion of deposis raes, which means increasing in bank capial coss, hus reduce he charer value of bank. In order o compensae for he decline of profis, bank managers will engage in high-risk aciviies harmful for financial sabiliy. This conclusion is suppored by Hellmann e al. (2000) and Repullo (2004). Yeyai and Micco (2007) using saisics from 8 Lain American counries, find ha due o differen producs of foreign banks, brand awareness and hidden securiy, foreign capial infilraion will reduce he degree of compeiion, hen improve he charer value of banks and promoe he sabiliy of he financial sysem. On he oher hand, several scholars agree wih compeiion-sabiliy hypohesis, which believe ha compeiion leads o sabiliy. I is assumed ha he fierce compeiion in he loan marke will reduce he lending rae and he low ineres rae will enable borrowers o raise heir capial reurn rae, reduce he financial cos and defaul risk, and hereby reduce he sysemic risk of he banking indusry (Boyd and De Nicolo, 2005). In addiion, big banks ake more risk because hey have he chance o ge he guaranee from he governmen. Xiaoqing e al. (2014) using saisics from 14 Asia-pacific counries finds ha he higher concenraion of banking will reduce he pricing power of banks, hus encourage banks o ake greaer risk and deepen financial fragiliy. In addiion, Marinez and Repullo (2010), on he basis of compeiive sabiliy, improved he saic equilibrium model and proposed he MMR model. Their research shows ha here is a U ype relaionship beween compeiion and financial sabiliy. Under a highly cenralized marke srucure, he risk ransfer effec dominaes, and under less compeiive marke srucure, he profi marginal effec dominaes. Recen research also began o discuss he non-linear relaionship beween compeiion and bank risk. Tebak e al. (2012) and Jimenez e al. (2013) demonsrae he conclusion of nonlinear relaionship beween compeiion and bank risk. Van Hoose (2007) argues ha sric capial regulaion promps banks o replace loans wih risky asses wih high reurn on invesmen, increase bank managemen coss and affec heir profiabiliy Pasiouras e al. (2009) using he sochasic fronier analysis o examine he 615 banks of 74 counries in he year of , poins ou ha under more effecive supervision and sric marke discipline, banks disclose informaion more accuraely and imely). So sric capial requiremens will increase cos efficiency and reduce profi efficiency. Ayadi and Boujelbene (2014) suppor he moral hazard hypohesis, and argue ha capial regulaion will reduce bank performance and srenghen financial insiuions' liquidiy risk managemen is criical o financial sabiliy. Several scholars also ake marke srucure and regulaion ino analyzing he impac on bank performance. Agoraki e al. (2011) sudy he banking secor of Cenral and Easern Europe in he year of and find ha he minimum capial requiremen would generally reduce he risk of banks, bu for banks wih marke forces, capial requiremens migh no only reduce he risk bu he level will also encourage banks o engage in high-risk aciviies, so regulaory auhoriies of policy need o consider he indusry marke srucure. 3. Model and Daa 3.1 Variables and Model (1) Bank risk-aking: using wo indicaors o replace bank risk-aking, he proporion of weighed risk asses in he oal asses (SAR) and Z index. The raio of risk-weighed asses o oal asses measures he level of banks risk from he perspecive of porfolio risk. The higher he proporion of weighed risk asses, he higher he curren level of risk facing banks. Z-Score reflecs he overall risk level of he bank. According o he calculaion mehod of Z index, ROA is he rae of reurn on asses, E / A is he raio of equiy o asses, σ(roa) is he 43

3 sandard deviaion of he rae of reurn on asses(roa) using 3 rolling mehod. The higher he Z-Score, he more sable he bank, and he lower he probabiliy of bankrupcy. The calculaing mehod of Z index as following: ROAi E Ai Zi ROA (2) Bank Capial: The capial adequacy raio (CAR) and he core capial adequacy raio (CCAR) are he capial regulaory indicaors developed by he Basel Commiee, reflecing he exen o which banks can bear he loss of heir own capial. On he one hand, he higher level of capial, he higher degree of risk loss ha banks can afford o reduce heir risk; on he oher hand, he higher capial adequacy raio represens a higher degree of risk aversion o he bank wih higher of he risk premium, and hus end o improve is business performance. (3) Bank liquidiy: This paper uses liquidiy raio (LIQ) and deposi-loan raio (DL) o measure he liquidiy of banks. The liquidiy raio reflecs he amoun of bank's liquidiy asses, and he larger he indicaor, he beer he liquidiy of he bank. The deposi and loan raio deermine he amoun of bank loans, he higher he deposi and loan raio means he insufficien liquidiy. In order o mainain heir own liquidiy banks need o pay he corresponding coss o worse business performance, bu wih liquidiy increasing, he abiliy of banks o resis risks will be srenghened, so ha heir risk can be reduced. (4) Bank Compeiion: This paper uses he CR index o measure he degree of compeiion in he banking marke, indicaing ha he proporion of oal loan accoun of each bank in oal loan of he banking indusry. This indicaor indicaes ha he marke share of he marke in banking indusry, reflecing he marke compeiion in he marke of each enerprise. Generally speaking, he higher proporion of loan in he overall loan of banking indusry, he bigger marke share of individual bank. I is obvious ha he low level of compeiion is beneficial for banks o improve heir performance. A he same ime, if he number of banks is so small, banks will change heir porfolio risk and risk-aking behavior. In addiion, his paper also conrols bank-specific variables such as bank provisioning rae (PCR), cos-o-income raio (CIR) and scale (LNA).The bank provision rae measures he provision for a bank loan loss reserve, which means ha he more provision is made, he sronger he abiliy o resis risks. The higher cos-o-income raio represens higher operaional efficiency, and measures he cos of per uni of inpu, hereby affecs he bank's profiabiliy and risk. Expanding he size of banks can reduce heir operaing coss and increase bank yields, bu may also increase he risk of banks. In addiion, he economic environmen will direcly affec he operaing saus of counry's banks, so his paper selecs GDP growh rae and M2 growh rae o reflec he macroeconomic siuaion and he money supply environmen on bank performance and risk behavior. If he circumsances of economic siuaion is beer, he profiabiliy of banks will also increase, and corporae defaul risk will be reduced, so he bank is facing less risk. Table 1 shows he definiion of research. i Table 1. Definiion of research Risk-aking capial liquidiy compeiion conrol variable SAR LNZ CAR CCAR LIQ DL CR PCR CIR LNA LNGDP RM2 he proporion of weighed-asses o oal asses ln Z capial adequacy raio core capial adequacy raio liquidiy raio deposi-loan raio each bank s loan accoun in he overall loan of banking indusry provisioning rae cos-o-income raio scale of asses he GDP growh rae of China he growh rae of currency 44 i ROAi E A ln ROAi i

4 In order o sudy he impac of bank liquidiy, capial and compeiion on he risk of banks, his paper esablishes he following measuremen model: RISK Capial 0 1 Liquidiy 2 5 k1 Conrol Risk represens he bank risk variable; Capial = {CAR, CCAR}, represen he bank capial variable(car represens capial adequacy raion and CCAR represens core capial adequacy raio); Liquidiy={LIQ,DL}, represen he bank liquidiy variable(liq represens liquidiy raio, Conrol = {PCR, CIR, LNA, LNGDP, RM2}, represen all he conrol variables(pcr represens he provisioning rae of banks, CIR represens cos-o-income raio, LNA represens scale of banks, LNGDP represens he GDP growh rae of China and M2 represens he growh rae of currency; Compeiion = {CR}, represen he bank compeiion variable(cr represens each bank s loan accoun in he overall loan of banking indusry). This paper uses he fixed effec mehod o esimae above model. 3.2 Sample and Daa This paper chooses he semi-annual daa of 16 lised banks from he fourh quarer of 2005 o he second quarer of 2016 in China as he research sample. Banks' risk variables, regulaory variables, compeiion variables, and oher conrol variables are all daa from he Wind daabase, and he availabiliy and auheniciy of he daa are reliable. 3.3 Daa descripion and Relevance Table 2. Descripive saisics of main variables VARIABLE MEAN SD MIN P25 P50 P75 MAX SAR(%) LNZ CAR(%) CCAR(%) LIQ(%) DL(%) CR(%) PCR(%) CIR(%) LNA LNGDP RM2(%) Table 2 repors he descripive saisical resuls of he main sudy variables. The proporion of weighed-risk asses in oal asses up o %, in addiion, LNZ up o 4.127, herefore, we can see some of he banks during he sample period have a high risk level. On average, he capial adequacy raio of % has reached he regulaory requiremens, bu he individual banks sill exis capial shorage phenomenon. The minimum liquidiy raio is 23% and he maximum value is 79.76%.I can be seen ha he liquidiy difference beween differen banks is large. Deposi and loan raio is only %, and did no mee he previous 75% of he regulaory sandards. The smalles marke share of banks is 0.113%, he larges is %, showing ha he marke compeiion beween banks in China is no sufficien. Table 3 repors he Pearson correlaion es resuls. I can be seen from Table 3 ha he correlaion coefficien beween he main variables is below 40%, and here is no serious muliple col-lineariy among he variables of his paper. 45

5 Table 3. Pearson correlaion es resuls SAR LNZ CAR CCAR LIQ DL CR PCR CIR LNA LNGDP RM2 SAR LNZ CAR *** *** CCAR *** *** 0.954*** LIQ ** 0.136** DL *** *** *** CR *** PCR *** *** CIR ** LNA *** LNGDP *** * RM *** Empirical Resul To precisely esimae he impac of regulaion especially under he liberaion of loan ineres rae and deposi ineres rae marke and compeiion from banking indusry on risk-aking behavior of banks, based on above heoreical analysis, his paper esablishes an evaluaion model o evaluae using he fixed effec mehod. The resul of evaluaion of he fixed effec mehod can be seen in he Table 4 and Table 5. Table 4. The impac of supervision and compeiion on he lised bank s risk (1) (2) (3) (4) SAR SAR LNZ LNZ CAR *** *** (0.1809) (0.0051) CCAR ** *** (0.1854) (0.0063) LIQ (0.0452) (0.0025) DL (0.1064) (0.0091) CR *** * *** ** (0.6421) (0.9081) (0.0316) (0.0397) PCR ** (0.0076) (0.0068) (0.0002) (0.0003) CIR (0.0774) (0.0706) (0.0063) (0.0058) LNA ** ** ** (1.3582) (1.4414) (0.0564) (0.0675) LNGDP *** *** (0.7299) (0.6947) (0.0290) (0.0278) 46

6 RM ** ** ** ** (0.0875) (0.0882) (0.0038) (0.0033) _cons ** ** ** ( ) ( ) (0.7092) (0.9499) N R F value Banks hold more capial (capial adequacy raio and core capial adequacy raio) can significanly reduce he combined risk of banks and increase bank sabiliy (LNZ), which is consisen wih he risk ransfer hypohesis. The higher raio of he capial adequacy of he bank, he lower he risk level of he bank iself. So here is a reverse relaionship beween he capial holdings and he bank risk. In he face of capial regulaory consrains, no direcly hrough he increase in level of capial, banks in China ofen adjus he srucure of he weighed-risk porfolio o mee requiremens of regulaion, hereby reduce he risk of bank porfolio. I can be seen ha he regulaion of capial adequacy raio can reduce he risk behavior of Chinese banks. Increasing liquidiy (LIQ and DL) can reduce bank risk, bu his effec is no significan. This means ha he use of liquidiy raio or deposi-loan raio of he regulaory measures did no have a significan consrain on he risk behavior of domesic banks. Wih he increasing liberaion level of financial marke and he increasingly complex and diversified srucure of he banks asses and liabiliies, i is necessary for regulaors o comply wih he laes regulaions of Basel III o se up more reasonable liquidiy regulaory indicaors o mee liquidiy risk managemen. The more sufficien compeiion among banks (smaller CR) will no only increase he weighed- risk asses of banks, bu also increase he bank's bankrupcy probabiliy and reduce he overall operaing sabiliy of he bank (LNZ), which is in line wih compeiion-fragile hypohesis. Compeiion -fragile hypohesis argues ha he fierce compeiion among he bank loan marke, o a cerain exen, will reduce he bank's lending raes and profi margins, and hen encourage he bank's risk-aking behavior. As he bank provision rae (PCR) is improved, he bank reserve is fully uilized o resis risk, and he operaing performance (ROA) has a posiive impac. Bank size (LNA) will reduce is profiabiliy, bu also increase he risk of banks. As China's large banks are mainly sae-owned commercial banks, is sysem is huge, so increasing in size may lead o serious agency problems making bank earnings decline. In addiion, he governmen implici guaranee breeds moral hazard, and he greaer he size of he bank, he greaer he possibiliy of governmen assisance, ha is o say, "big bu no down", so large banks have he incenive o engage in high-risk invesmen and increase risk. Beer economic siuaion (LNGDP) can improve he overall operaing performance (ROA) and reduce he bankrupcy probabiliy (LNZ). During he period of economic growh, srong invesmen in enerprises, expansion of bank invesmen business, and furher increase in profi margins, while he bank's overall bankrupcy risk will be reduced. Higher growh rae of he money supply (RM2) will significanly reduce he ne ineres margin. In addiion, he rapid increasing in money supply (RM2) can reduce bank porfolio risk, bu meanime increase he overall bankrupcy risk (LNZ). Twice adjusmen of deposi and lending rae in 2012 and fully liberaion of lending ineres rae in 2013 means China has gone ino he acceleraion phase of ineres rae marke reform. Since banks have more power in pricing, based on he benchmark ineres rae on he marke, enable banks o fully compee and conrol heir risk level. Based on he ime characerisics of China s ineres rae reform, his paper divides ino he slow period of ineres rae reform from 2005 o 2011 and he acceleraion period of 2012 o he second quarer of 2016 using dummy variable. Tha is, if in he ime of 2005 o 2011, hen dummy variable equal o 0, oherwise, in he ime of 2012 o he second quarer of 2016, dummy variable equal o 1, for invesigaing wheher he impac of supervision and compeiion on risk-aking behavior of banks have difference under differen sage of liberaion of ineres rae. Table 5 repors he resul of impac of regulaion and compeiion on bank s risk-aking level under differen ineres rae reform sage in China. I can be seen ha under he phase of liberaion of ineres rae, compeiion can reduce he combinaion of banks risk. However, lending ineres rae reform enables banks have he righs o self-pricing in marke, bu also allows banks o face more uncerainy, including ineres rae risk and banks need o hold more capial o resis such risk. Furhermore, he liberaion of ineres rae in China srenghens he 47

7 compeiion level of banking indusry. Tha is, if banks hold more liquidiy asses, he deposi cos will direcly limi he abiliy o increase ne ineres margin of banks. A he same ime, banks need o reduce heir lending rae o arac borrowers, hereby in urn reduce he profiabiliy of banks. Then liberaion of ineres rae enables banks fall ino greaer risk exposure, and banks need o mainain a higher level of capial o mainain heir repuaion. Table 5. The impac of regulaion, compeiion on bank risk-aking under ineres rae liberaion (5) (6) (7) SAR SAR SAR CAR *** *** *** (0.1667) (0.1644) (0.1746) CAR*DUM ** (0.0684) LIQ * * (0.0420) (0.0421) (0.0410) LIQ* DUM * (0.0242) CR ** *** (0.6300) (0.6082) (0.8245) CR* DUM * (0.1198) PCR (0.0073) (0.0072) (0.0073) CIR (0.0745) (0.0770) (0.0727) LNA * ** (1.3863) (1.4049) (1.3428) LNGDP (0.7221) (0.7231) (0.7294) RM ** ** ** (0.0681) (0.0739) (0.0846) _cons *** *** ** ( ) ( ) ( ) N R F value Conclusion This paper uses semi-annual daa of 16 lised banks from he fourh quarer of 2005 o he second quarer of 2016 as he research sample o sudy he impac of supervision and compeiion on he lised bank's risk in China. The resuls show ha he higher level of bank holdings (capial adequacy raio and core capial adequacy raion) can significanly reduce he combined risk of banks and increase bank sabiliy (LNZ).Increased liquidiy (liquidiy raio and deposi-loan rae) can reduce banks risk, bu his effec is no significan. The more fully compeiion among banks (he smaller CR) will no only increase he proporion of weighed-risk asses in oal asses (SAR), bu also increase he bank's bankrupcy probabiliy and reduce he overall operaing sabiliy of he bank (LNZ). 48

8 The resuls of he impac of regulaion and compeiion on risk-aking behavior under differen sage of liberaion shows ha liberaion of ineres rae has increased he level of compeiion among banks, alhough he banks' own marke share reducion will increase bank risk, bu under he liberaion of ineres rae marke background, compeiion can reduce he combinaion of banks risk. However, ineres rae reform enables banks o have he righs o self-pricing, bu also allows banks o face more uncerainy, including ineres rae risk and banks need o hold more capial o resis risk. I is necessary for auhoriies o srenghen supervision of banking indusry and keep he compeiion of banks under he appropriae inerval. I is also necessary for regulaors o comply wih he laes regulaions of Basel III o se up more reasonable liquidiy regulaory indicaors o mee liquidiy risk managemen. References Ayad N., & Boujelbene, Y. (2014). The role of capial regulaion on bank performance. Inernaional Journal of Managerial and Financial Accouning, 6(3), hps://doi.org/ /ijmfa Bain, J. S. (1951). Relaion of Profi Rae o Indusry Concenraion, American Manufacuring The Quarerly Journal of Economics, 65(4), hps://doi.org/ / Berger, A. N. (1995). The Profi-Srucure Relaionship in Banking-Tess of Marke-Power and Efficien-Srucure Hypoheses. Journal of Money, Credi and Banking, 27(2), Boyd, J. H., & Nicolo, G. D. (2005). The Theory of Bank Risk-aking and Compeiion. Journal of Finance, 60(2), hps://doi.org/ /j x Fu, X. Q., & Heffernan, S. (2009). The Effecs of Reform on China s Bank Srucure and Performance. Journal of Banking and Finance, 33(1), hps://doi.org/ /j.jbankfin Fu, X. Q., Lin, Y. J., & Molyneux, P. (2014). Bank Compeiion and Financial Sabiliy in Asia Pacific. Journal of Banking and Finance, 38, hps://doi.org/ /j.jbankfin Hellmann, T. F., Murdock, K.C., & Sigliz, J. E. (2000). Liberalizaion, Moral Hazard in Banking, and Prudenial Regulaion, Are Capial Requiremens Enough?. The American Economic Review, 90(1), hps://doi.org/ /aer Jimeneza, G., Lopezb, J. A., & Saurinaa, J. (2013). How does compeiion affec bank risk-aking?, Journal of Financial Sabiliy, 9(2), hps://doi.org/ /j.jfs Keeley, M. (1990). Deposi Insurance, Risk, and Marke Power in Banking. The American Economic Review, 80(5), Kim, D., & Sanomero, A. M. (1988). Risk in Banking and Capial Regulaion. The Journal of Finance, 43(5), hps://doi.org/ /j b03966.x Llody-Williams, D. M., Molyneux, P., & Thornon, J. (1994). Marke srucure and performance in Spanish banking. Journal of Banking and Finance, 18(3), hps://doi.org/ / (94) Marinez-Miera, D., & Repullo, R. (2010). Does Compeiion Reduce he Risk of Bank Failure?. The Review of Financial Sudies, 23(10), hps://doi.org/ /rfs/hhq057 Mason, E. S. (1939). Price and Producion Policies of Large-scale Enerprise. The American Economic Review, 29(supplemen), Repullo, R. (2004). Capial requiremens, marke power, and risk-aking in banking. Journal of Financial Inermediaion, 13(2), hps://doi.org/ /j.jfi Tabak, B. M., Fazio, D.M., & Cajueiro, D. O. (2013). The relaionship beween banking marke compeiion and risk-aking, Do size and capializaion maer?. Journal of Banking and Finance, 36(12), hps://doi.org/ /j.jbankfin Van Hoose. D. (2007). Theories of bank behavior under capial regulaion. Journal of Banking and Finance, 31(12), hps://doi.org/ /j.jbankfin Copyrighs Copyrigh for his aricle is reained by he auhor(s), wih firs publicaion righs graned o he journal. This is an open-access aricle disribued under he erms and condiions of he Creaive Commons Aribuion license (hp://creaivecommons.org/licenses/by/4.0/). 49