2018
DOI: 10.1111/fmii.12095
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The distribution of the Capital Purchase Program funds: Evidence from bank internal capital markets

Abstract: We investigate the role played by the internal capital markets of bank holding companies in the distribution of the Capital Purchase Program funds to subsidiaries. We find that while all banks used a similar internal capital allocation to support their subsidiaries, program participants transferred more capital to their subsidiaries than nonparticipants. Smaller bank subsidiaries with lower capital and earnings received more capital than other subsidiaries. Our results support the argument that the distributio… Show more

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Cited by 9 publications
(5 citation statements)
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“…They "find that smaller bank subsidiaries with lower capital and earnings received more capital than other subsidiaries, which sup-ports…the argument that the distribution of capital was done in accordance with regulatory requirements that mandate bank holding companies to act as a source of strength for their subsidiaries." Mukherjee and Pana (2018) show results that corroborate the argument that BHCs act as a source of strength for their subsidiaries. This is also confirmed more recently by Avramidis et al (2020).…”
Section: Introductionsupporting
confidence: 80%
See 1 more Smart Citation
“…They "find that smaller bank subsidiaries with lower capital and earnings received more capital than other subsidiaries, which sup-ports…the argument that the distribution of capital was done in accordance with regulatory requirements that mandate bank holding companies to act as a source of strength for their subsidiaries." Mukherjee and Pana (2018) show results that corroborate the argument that BHCs act as a source of strength for their subsidiaries. This is also confirmed more recently by Avramidis et al (2020).…”
Section: Introductionsupporting
confidence: 80%
“…Also Mukherjee and Pana (2018) analyze the impact of internal capital markets on the strength of the subsidiaries. They "find that smaller bank subsidiaries with lower capital and earnings received more capital than other subsidiaries, which sup-ports…the argument that the distribution of capital was done in accordance with regulatory requirements that mandate bank holding companies to act as a source of strength for their subsidiaries."…”
Section: Introductionmentioning
confidence: 99%
“…Its basic content is that when the enterprise has insufficient funds, the enterprise will first consider to solve the problem of the funds through the normal credit channel and loan to the financial institution [ 3 ]. Under normal situations, financial institutions will ensure the safety of loans by guaranteeing the fixed assets required by the loan unit to avoid risks [ 4 ]. However, some small- and medium-sized enterprises cannot obtain financial support from banks because they cannot provide corresponding fixed assets as collateral and thus lose the opportunity to expand reproduction and expansion and even go bankrupt.…”
Section: Introductionmentioning
confidence: 99%
“…Also Mukherjee and Pana (2018) analyze the impact of internal capital markets on the strength of the subsidiaries. They “find that smaller bank subsidiaries with lower capital and earnings received more capital than other subsidiaries, which supports…the argument that the distribution of capital was done in accordance with regulatory requirements that mandate bank holding companies to act as a source of strength for their subsidiaries.” Mukherjee and Pana (2018) show results that corroborate the argument that BHCs act as a source of strength for their subsidiaries. This is also confirmed more recently by Avramidis et al (2020).…”
Section: Introductionmentioning
confidence: 99%