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Management views about desired capital: The case of UK banks and building societies

Isaac Alfon (Economics of Financial Regulation team of the Financial Services Authority)
Isabel Argimon (Economics of Financial Regulation team of the Financial Services Authority)
Patricia Bascuñana‐Ambros (Finance, Strategy and Risk Division, Financial Services Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS, UK; tel: +44 (0)20 7066 1000; e‐mail: patricia.bascunana‐ambros@fsa.gov.uk)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Article publication date: 1 September 2004

Abstract

This paper presents the findings of a survey of UK banks and building societies undertaken to understand management’s reasons behind their decisions about capital. The survey shows that: (a) firms use different approaches to form their views about “desired” capital; (b) the main factors explaining the level of a firm’s desired capital are financing the firm’s long‐term business strategy and FSA’s capital requirements; (c) actual capital usually exceeds firms’ desired capital; (d) a change in a firm’s individual capital requirements is likely to lead to a change in its desired capital in the medium term. The paper reflects the authors’ views and not the corporate views of the FSA.

Keywords

Citation

Alfon, I., Argimon, I. and Bascuñana‐Ambros, P. (2004), "Management views about desired capital: The case of UK banks and building societies", Journal of Financial Regulation and Compliance, Vol. 12 No. 3, pp. 263-274. https://doi.org/10.1108/13581980410810830

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited