scholarly journals Capital Adequacy Regulation

2020 ◽  
Author(s):  
Aysa Siddika ◽  
Razali Haron
Keyword(s):  
Regulatory Authority ◽  
Capital Adequacy ◽  
Bank Capital ◽  
Regulatory Capital ◽  
Minimum Capital ◽  
Basel Committee ◽  
Minimum Capital Requirement ◽  
Risk Sensitive ◽  
Capital Adequacy Regulation

This chapter aims to provide a concise overview of the capital adequacy regulation, importance of the regulation, and evolution of the capital adequacy regulation. Bank capital executes the significant role of preventing the bank from failure and acts as a buffer against possible losses. Capital adequacy is the least amount of capital a bank has to preserve to execute the business, take advantage of profitable growth opportunities, absorb losses, and sustain the customers’ confidence on it. Several bank crises and bank defaults motivate the Basel Committee on Banking Supervision to provide a comprehensive guideline in managing bank capital. The capital adequacy regulation is an international standard to safeguard the banks through setting a risk-sensitive minimum capital requirement. The regulatory authority sets the regulatory capital, and the operating banks are required to maintain the adequate level of capital.

scholarly journals Regulatory Capital is a Panacea for Efficiency, Credit Growth and Reducing Non-Performing Loans in Commercial Banks

2021 ◽  
Vol 16 (2) ◽  
pp. 265-287
Author(s):  
Amina Malik ◽  
◽  
Babar Zaheer Butt ◽  
Shahab Ud Din ◽  
Haroon Aziz ◽  
...  
Keyword(s):  
Commercial Banks ◽  
Financial Statements ◽  
Capital Adequacy ◽  
Regulatory Capital ◽  
Credit Growth ◽  
Minimum Capital ◽  
Capital Adequacy Ratio ◽  
The Impact ◽  
Interest Margin

This study examined the effectiveness of regulatory capital in enhancing efficiency and credit growth and reducing bad loans in commercial banks listed on the Pakistan Stock Exchange (PSX) from 2010 to 2019. Precisely, the impact of capital adequacy ratio (CAR) was studied on net interest margin (NIM), credit growth (CR) and non-performing loans (NPLs). The impact of capital adequacy regulations was assessed by retrieving data from financial statements analysis (FSA), Bank Financial statements and the World Bank website. Panel regression models including ordinary least squares (OLS), fixed and random effects under robust title were applied in this study. Results revealed that the implementation of stringent CAR plays the role of panacea and increases interest margin & credit growth and a reduction of NPL in Pakistani commercial banks. The study provides practical results for regulators to customize regulations on credit growth to reduce non-performing loans and maintain healthy growth of loans by not compromising on interest margins as well as maintenance of minimum capital adequacy ratios. With the high significance of stringent minimum capital adequacy for banks, the findings of the study are valuable for regulators, banks, auditors and investors, as capital adequacy ratio commonly plays the role of Panacea in terms of efficiency, credit growth and reduction in non-performing loans. Keywords: capital adequacy ratio, efficiency, credit growth, non-performing loans

scholarly journals Znaczenie agencji oceniających (ratingowych) po wprowadzeniu w 2004 roku przez Komitet Bazylejski Nowej Umowy Kapitałowej

2004 ◽  
pp. 101-112
Author(s):  
Monika Gładysz
Keyword(s):  
Capital Requirements ◽  
Capital Adequacy ◽  
Special Importance ◽  
Banking Supervision ◽  
External Assessment ◽  
Minimum Capital ◽  
Basel Committee

Basel Committee on Banking Supervision published in 2004 the New Capital Adequacy Framework. A special importance is assigned in this document to the external assessment agencies. Banks will have to determine the minimum capital requirements on the basis of assessments by the external agencies. The role of the external assessment agencies in the New Capital Adequacy Framework and potential threats and benefits from using by banks the external assessments for determination of the. minimum capital requirements are presented in the paper.

scholarly journals On the Rising Complexity of Bank Regulatory Capital Requirements: From Global Guidelines to their United States (US) Implementation

2018 ◽  
Vol 11 (4) ◽  
pp. 77 ◽  
Author(s):  
James R. Barth ◽  
Stephen Matteo Miller
Keyword(s):  
United States ◽  
Latin American ◽  
Debt Crisis ◽  
The United States ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Bank Capital ◽  
Regulatory Capital ◽  
Minimum Capital ◽  
The Us

After the Latin American Debt Crisis of 1982, the official response worldwide turned to minimum capital standards to promote stable banking systems. Despite their existence, however, such standards have still not prevented periodic disruptions in the banking sectors of various countries. After the 2007–2009 crisis, bank capital requirements have, in some cases, increased and overall have become even more complex. This paper reviews (1) how Basel-style capital adequacy guidelines have evolved, becoming higher in some cases and overall more complex, (2) how the United States (US) implementation of these guidelines has contributed to regulatory complexity, even when omitting other bank capital regulations that are specific to the US, and (3) how the US regulatory measures still do not provide equally valuable information about whether a bank is adequately capitalized.

U. S. Investment Banks in the Context of the Post-Crisis International Banking Regulation Reform

2020 ◽  
Vol 2020 (1) ◽  
pp. 21-40
Author(s):  
Eduard Dzhagityan ◽  
Anastasiya Podrugina ◽  
Sofya Streltsova
Keyword(s):  
Financial Stability ◽  
Banking Regulation ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Investment Banks ◽  
Basel Iii ◽  
International Banking ◽  
Minimum Capital ◽  
Negative Effect

The article looks into the reasons underlying the outspread of the full-scale mechanism of banking regulation over U. S. investment banks. We analyze the effect of the Basel III standards on stress-resilience of investment banks and examine the role of U. S. investment banks in ensuring financial stability. Based on regression analysis we found that minimum capital adequacy standards of Basel III do not have negative effect on ROE of the U. S. investment banks that are G-SIB category-designate; however, additional capital requirements (Higher Loss Absorbency (HLA) surcharge) that depend on G-SIB’s systemic significance according to their bucket as per Financial Stability Board classification do have significant and negative effect on ROE in the post crisis period. Besides, leverage requirements that also depend on G-SIB’s systemic significance have a statistically significant effect on ROE.

scholarly journals The Impact of Market Discipline on Banks’ Capital Adequacy: Evidence From an Emerging Economy

2015 ◽  
Vol 4 (1) ◽  
pp. 61-73 ◽  
Author(s):  
Ayesha Afzal
Keyword(s):  
Perceived Risk ◽  
Banking System ◽  
Empirical Support ◽  
Market Discipline ◽  
Capital Adequacy ◽  
Risk Level ◽  
Bank Capital ◽  
The Cost ◽  
The Impact

This study presents empirical support for the role of market discipline in augmenting bank capital ratios in a competitive banking environment. Using a panel dataset on domestic commercial banks in Pakistan from 2009 to 2014, the study determines if the market penalized banks for any increase in their risk profile through a rise in the cost of raising funds. The results point to a significant relationship between capital adequacy and other risk factors, with the cost of deposits demonstrating how depositors align the required return to the perceived risk level of the bank. These findings have important implications for policymakers as market discipline could complement the role of regulators, which would eventually lower the cost of supervision. Moreover, the focus of international reforms as seen through the implementation of Basel III should continue to be on developing a more competitive and transparent banking system.

8. Micro-prudential regulation I

2019 ◽  
pp. 329-406
Author(s):  
Iris H-Y Chiu ◽  
Joanna Wilson
Keyword(s):  
Financial Crisis ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Basel Ii ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Prudential Regulation ◽  
Basel Committee ◽  
The Global Financial Crisis ◽  
Capital Adequacy Regulation

This chapter studies capital adequacy regulation, which prescribes that banks can only take certain levels of risk that are supported by adequate levels of capital. In this way, capital adequacy rules provide a form of assurance that banks with adequate levels of capital are likely able to withstand losses that may result from their risk-taking. The Basel Committee developed its first set of capital adequacy standards in the Basel I Capital Accord of 1988. It was subsequently overhauled into the Basel II Capital Accord in 2003. After the global financial crisis of 2007–9, the Basel II Accord’s shortcomings were extensively discussed and the Basel Committee introduced a package of reforms in order to plug the gaps in Basel II. The Basel III package is the most extensive suite of micro-prudential regulation reforms seen to date, as they deal with capital adequacy and a range of other micro-prudential standards.

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