Authors: Lily Gordon and Beverly Hirtle
-
-
The Teller Window is a publication featuring expert knowledge and insight from the New York Fed, including thoughts and perspectives from senior leaders.
Do you have a request for information and records? Learn how to submit it.
Learn about the history of the New York Fed and central banking in the United States through articles, speeches, photos and video.
-
-
-
The Governance & Culture Reform hub is designed to foster discussion about corporate governance and the reform of culture and behavior in the financial services industry.
Need to file a report with the New York Fed? Here are all of the forms, instructions and other information related to regulatory and statistical reporting in one spot.
The New York Fed works to protect consumers as well as provides information and resources on how to avoid and report specific scams.
-
-
-
The New York Innovation Center bridges the worlds of finance, technology, and innovation and generates insights into high-value central bank-related opportunities.
The growing role of nonbank financial institutions, or NBFIs, in U.S. financial markets is a transformational trend with implications for monetary policy and financial stability.
The New York Fed offers the Central Banking Seminar and several specialized courses for central bankers and financial supervisors.
-
-
Economic Policy Review
How Do Banks Build Equity Capital?
Volume 32, Number 1
September 2026
September 2026
JEL classification: G21, G28, G35
This article examines the evolution of equity capital in the U.S. banking industry over the past thirty-five years. Earnings are the major driver of increases in equity capital in the banking industry. While common stock issuance is frequent, amounts issued are generally small and do not contribute meaningfully to equity capital growth in most cases. Common stock dividends and repurchases are significant drains on equity capital. It is not uncommon for banks to pay out more than they earn, reflecting both capital planning motivations and negative shocks to earnings. It is also common for banks to both issue new common stock and make repurchases in the same year, with these offsetting actions related to employee stock-based compensation.
Author Disclosure Statement(s)
Lily Gordon
Lily Gordon declares that she has no relevant material financial interests that relate to the research described in this paper.
Beverly Hirtle
Beverly Hirtle declares that she has no relevant material financial interests that relate to the research described in this paper.
Lily Gordon declares that she has no relevant material financial interests that relate to the research described in this paper.
Beverly Hirtle
Beverly Hirtle declares that she has no relevant material financial interests that relate to the research described in this paper.
Suggested Citation:
Gordon, Lily, and Beverly Hirtle. 2026. “How Do Banks Build Equity Capital?.” Federal Reserve Bank of New York Economic Policy Review 32, no. 1, September. https://doi.org/10.59576/epr.32.1.1-48
Gordon, Lily, and Beverly Hirtle. 2026. “How Do Banks Build Equity Capital?.” Federal Reserve Bank of New York Economic Policy Review 32, no. 1, September. https://doi.org/10.59576/epr.32.1.1-48
By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement. 
