What has bank capital ever done for us?
Òscar Jordà, Björn Richter, Moritz Schularick and Alan Taylor research the issue:
Higher capital ratios are unlikely to prevent a financial crisis. This is empirically true both for the entire history of advanced economies from 1870 to 2013 and for the post-WW2 period, and holds both within and between countries. The authors of this column reach this conclusion using newly collected data on the liability side of banks’ balance sheets in 17 countries. However, higher capital buffers have social benefits in terms of macro-stability: recoveries from financial crisis recessions are much quicker with higher bank capital.
They also quite from Bagehot:
A well-run bank needs no capital. No amount of capital will rescue a badly run bank.
Infact banking research hardly focuses on management aspects of banking. It is all lost in all financial mumbo-jumbo..