Buyout financing

Abstract

Capital requirements are key provisions through which bank supervisors ask banks to hold a given share of their assets as equity. The increase in bank capital requirements is aimed at improving the resilience of banks to adverse shocks, thereby restoring public confidence, and fostering bank stability. In the aftermath of the global financial crisis, regulators have embarked on a series of policy experiments with changes in individual bank capital requirements. However, empirical investigation of such policy shifts is challenging because capital requirements do not vary significantly over time and affect banks in a proportional manner. Moreover, there is growing interest about the effects of bank capital regulations on private equity. The purpose of the current chapter is to analyse the literature on the effects on capital requirements on private equity.