Does the capital structure affect banks’ profitability? Pre- and post financial crisis evidence from significant banks in France

A debate has emerged on the costs for banks of the increase in capital requirements under Basel III. We bring empirical evidence on this issue by analyzing the effect of different capitalization measures on banks’ ROE on a sample of large French banks over the period 1993-2012, controlling for risk-taking as well as a range of variables including the business model.