Prompt corrective action rules have caused banks to increase capital and operate more safely, according to Kevin T. Jacques of the Office of the Comptroller of the Currency and Raj Aggarwal of John Carroll University.

The researchers find equity capital held by U.S. banks rose 28% in the two years after Congress adopted the Federal Deposit Insurance Corp. Improvement Act of 1991, which authorized regulators to seize banks when capital falls below 2%.

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