How regulation of bank capital adequacy and liquidity affects pricing of bonds of the banks

Aida Tatibekova () and Mukhtar Bubeyev ()
Additional contact information
Aida Tatibekova: Turan University, Kazakhstan
Mukhtar Bubeyev: Turan University, Kazakhstan

Entrepreneurship and Sustainability Issues, 2020, vol. 7, issue 3, 1708-1722

Abstract: The article discusses the evolution of regulation of banks in Kazakhstan before and after financial crisis of 2007-2008. The purpose of the article is to examine how introduction of Basel III standards on capital adequacy and liquidity affected pricing of bonds of Kazakh banks. In general, post crisis reforms in the banking system, mainly Basel III standards, enhanced capital adequacy and liquidity of the banks. Banks now tend to hold more capital and high-quality liquid assets compared to pre-crisis period. Our analysis showed that banks with better liquidity conditions would receive cheaper funding via bonds compared to other banks. We found that bond prices reacted explicitly to the changes in liquidity requirements, rather than capital measures. New capital adequacy measures seem to be less constraining for banks with government support. In contrast, changes in capital measures made substantial impact on bond spreads of banks without government support, these banks actively increased their capital in post crisis period.

Keywords: capital adequacy; liquidity; crisis; risks; pricing (search for similar items in EconPapers)
JEL-codes: G10 G12 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://jssidoi.org/jesi/uploads/articles/27/Tatib ... nds_of_the_banks.pdf (application/pdf)
https://jssidoi.org/jesi/article/484 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:7:y:2020:i:3:p:1708-1722

DOI: 10.9770/jesi.2020.7.3(18)

Access Statistics for this article

Entrepreneurship and Sustainability Issues is currently edited by Manuela Tvaronaviciene

More articles in Entrepreneurship and Sustainability Issues from VsI Entrepreneurship and Sustainability Center
Bibliographic data for series maintained by Manuela Tvaronaviciene ().