Does bank capital affect lending behavior?. Gambacorta, L. & Mistrulli, P., E. Journal of Financial Intermediation, 2004.
Does bank capital affect lending behavior? [pdf]Paper  abstract   bibtex   
This paper investigates the existence of cross-sectional differences in the response of lending to monetary policy and GDP shocks owing to differences in bank capitalization. It adds to the literature by using the excess capital-to-asset ratio, which can better control the riskiness of banks' portfolios, and by disentangling the effects of the "bank lending channel" from those of the "bank capital channel." The results, based on a sample of Italian banks, indicate that bank capital matters in the propagation of different types of shocks to lending, owing to the existence of regulatory capital constraints and imperfections in the market for bank fund-raising. ?? 2004 Elsevier Inc. All rights reserved.

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