In the US, if I remember correctly, banks can get more capital simply by retaining earnings (instead of paying dividends) as loan-loss reserves. However, you're right that mere stock-market fluctuations don't count.
On Fri, Dec 18, 2009 at 3:35 AM, Laurent GUERBY <[email protected]> wrote: > On Thu, 2009-12-17 at 16:25 -0800, Jim Devine wrote: >> (2) higher bank equity prices --> more net worth, so given a constant >> leverage ratio (bank capital/assets), there are more loans (which are >> bank assets). > > Unless I'm mistaken higher bank equity prices doesn't translate to more > bank capital as used for prudential ratios: the bank has to emit new > shares to get more capital (which is of course somewhat easier in a bull > market). In France the terms used are "capital social" for real legal > capital (money that really came in) et "capitalisation boursiere" for > number of shares multiplied by share price (something completely > virtual), I'm not sure what are the US equivalent terms. > > Laurent > > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
