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Vol. 73, No. 1
Posted 1991-01-01

Do Bank Holding Companies Act as "Sources of Strength" for Their Bank Subsidiaries?


R. Alton Gilbert tests whether affiliation with BHCs affects the amount of capital injected into troubled banks. The author estimates a model designed to explain capital injections into troubled banks—those banks that must receive capital injections or reduce their assets to meet the minimum capital requirements. Gilbert finds that affiliation with BHCs does affect capital injections, but the effect depends on the size of a BHC relative to the size of its troubled bank subsidiary. The larger a BHC relative to the size of its troubled bank subsidiary, the larger the capital injection ratio.



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