01811cas a2200277 a 4500 AALejournalIMF015098 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498372237 1018-5941 BD-DhAAL BD-DhAAL Barajas, Adolfo. The Role of Bank Capital in Bank Holding Companies' Decisions / Adolfo Barajas, Thomas Cosimano, Dalia Hakura, Sebastian Roelands. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (37 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper examines the role of bank capital in decision-making by bank holding companies (BHCs) in the United States. Following Chami and Cosimano's (2001) call option approach to bank capital, BHCs optimally choose the amount of capital to insure the bank against becoming capital constrained in the future. We provide empirical support for this model, and find that a higher optimal level of capital leads to higher loan rates. Furthermore, higher loan rates result in lower amounts of lending. Thus, an increase in capital requirements is likely to lead to higher loan rates and a significant reduction in lending. Mode of access: Internet Cosimano, Thomas. Hakura, Dalia. Roelands, Sebastian. IMF Working Papers; Working Paper ; No. 2015/057 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/057/001.2015.issue-057-en.xml IMF e-Library