THE IMPACT OF REGULATION ON BANK EQUITY INFUSIONS

This article examines the extent to which regulatory capital standards influence infusions of external equity into commercial banks. While such infusions occur infrequently, they result in large adjustments to overall bank capital and provide important signals to regulators of managerial intent. Using a sample of 753 equity capital issues occurring during 1986 and 1987, we find evidence that regulatory minimum capital constraints are instrumental in influencing the financing decisions made by a significant subset of banks. © 1990.