The effects of capital buffers on profitability: An empirical study
Benjamin Tabak (),
Regis Ely (),
Joao Amaral () and
Additional contact information
Joao Amaral: Universidade de Brasilia
Economics Bulletin, 2017, vol. 37, issue 3, 1468-1473
This paper measures the effect of capital buffers and other determinants on banks' profitability in 51 countries during the period of 2000 to 2012. We have found a nonlinear relationship between return on assets and capital buffers. While capital buffers have a positive impact on profitability, its excess can diminish banks' profits. Countries with non-competitive markets do not seem to change this relationship, although higher market power enhances profits. We also examine other determinants of profitability. Since minimal requirements of equity capital are one of the main regulatory instruments for preventing financial risks, we hope that the results of this letter can help financial authorities to also understand the effects of capital buffers on profits.
Keywords: capital buffer; profitability; banking regulation. (search for similar items in EconPapers)
JEL-codes: G2 G1 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-16-00820
Access Statistics for this article
More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().