Higher bank capital requirements lead to stronger financial resilience post-crisis.
The study looked at how banks' specific capital requirements affected their capital ratios and balance sheets from 1989 to 2013. They found that higher requirements led to banks having higher capital ratios by shrinking assets, reducing risks, and raising capital. Even after the financial crisis of 2007-09, banks focused on raising capital, but mostly through lower-quality means. This shows that capital requirements can influence how banks manage their balance sheets and resilience.