Determinants of Bank Capital Structure. The Impact of Basel III.

Abstract

This paper examines which determinants of bank capital structure are reliably decisive for 15 publicly traded European and American banks from 2006 to 2015. Common factors of leverage such as Pro t, Size, Growth, Risk, Asset Structure and Interest Rate are used and additionally, a systematic risk proxy Financial Shock as well as a regulation dummy variable Basel III are included. We nd a positive statistically signi cant relationship between leverage and Size, Inter- est Rate and Financial Shock, whereas leverage exhibits a negative statistically signi cant relationship with Risk, Assets Structure and Basel III. Notably, using di erent leverage measures yield considerably diverse estimates for most deter- minants. We nd no speci c regional patterns but the estimates vary depending on the region. Therefore, regional variation may in uence the reliability of de- terminants.