The Effects of Regulatory Capital Requirements and Ownership Structure on Bank Lending in Emerging Asian Markets

Yasmeen Akhtar, Ghulam Mujtaba Kayani and Tahir Yousaf
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Yasmeen Akhtar: Department of Management Science, COMSATS University, Islamabad 44000, Pakistan
Ghulam Mujtaba Kayani: Department of Management Science, COMSATS University, Islamabad 44000, Pakistan
Tahir Yousaf: Business School of Sichuan University, Chengdu 610207, China

JRFM, 2019, vol. 12, issue 3, 1-20

Abstract: This study examines the impact of regulatory capital requirements and ownership structure on bank lending in Emerging Asian Markets. The findings of the study imply that banks with excess capital are less affected by capital constraints and enjoy opportunities to extend their credit portfolios. The monitory policy indicator has the expected negative and significant impact on bank lending. In case of well-capitalized banks, the interaction between the excess capital and monetary policy indicator has a significant positive relation with bank lending, which means that banks with excess capital have capability to raise uninsured financing and shield their loan portfolios as compared to less-capitalized banks that reduce their lending in the period of monetary tightening. In the case of bank ownership structure, banks with excess capital ratios and ownership concentration lead towards an increase in lending activity. The findings also show that well-capitalized banks with managerial ownership tend to reduce lending which validates agency theory of corporate governance.

Keywords: regulatory capital requirements; ownership structure; bank lending; monetary policy indicator; emerging Asian markets (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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