The determinants of European Banks’ capital structure : is there a difference between public and private banks?

Abstract

In this paper we examine wether 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 struture are more closely aligned with those that affect nonfinancial firms. Furthermore. This paper provides evidence that these differences can result in certain consequences wth 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 to the introduction of more demanding capital requirements through Basel III and, in particular, in the context of the new resolution regime with imposes additional capital requirements, where banks' access toequity and debt markets plays a pivotal role