September 2021 issue contents
The Determinants of European Banks' Capital Structure: Is There a Difference between Public and Private Banks?

Vitor Oliveiraa,b and Clara Raposob,c


In this paper we examine whether the determinants of European banks' capital structure depend on the type of the institution (private or public). Using an international sample of 586 banks from 21 European countries for the period of 2000 to 2016, we find that when compared with private banks, the determinants of public banks' capital structure are more closely aligned with those that affect nonfinancial firms. Furthermore, this paper provides evidence that these differences can result in certain consequences with regards to the access to the market, which implies that public banks are more subject to market discipline. This is a very topical question, particularly when studied in the context of the introduction of more demanding capital requirements through Basel III and, in particular, in the context of the new resolution regime which imposes additional capital requirements, where banks' access to equity and debt markets plays a pivotal role.

JEL Code: G21, G32.

Full article (PDF, 48 pages, 600 kb)

a  Banco de Portugal
b  ISEG – Lisbon School of Economics and Management, Universidade de Lisboa