Domenico Giannone

Sep 20, 2024 | richmondfed.org | Nina Boyarchenko |Domenico Giannone |Anna Kovner

September 2024, No. 24-08 Bank Capital and Real GDP Growth Download paper We find evidence that bank capital matters for the distribution of future GDP growth but not its central tendency. Growth in the aggregate bank capital ratio compresses the tails of expected GDP growth, a relationship that is particularly robust in reducing the probability of the worst GDP outcomes.