Nexus between bank capital and risk-taking behaviour: Empirical evidence from US commercial banks

The study aims to investigate the effect of conventional capital ratio, risk-based and buffer ratio on commercial bank risk-taking over period from 2002 2019 using a two-step GMM method. finding reveals that there is positive relationship between traditional for full sample results, which supported by regulatory hypothesis. results are same across various categories based capitalization liquidity. Whereas negative when measured through buffer, in line with moral hazard outcomes consistent all subcategories other than well-capitalized low liquid banks. findings risk proxied loan loss provision. impact ratios pre-, pro- post-crisis eras heterogeneous ?significant. have significant insights regulators observe differences among periods well, adequately, under, significantly under-capitalized, high insured banks USA.