The Determinants of Bank Capital for East Asian Countries

Rubi Ahmad and Mohamed Albaity

Global Business Review, 2019, vol. 20, issue 6, 1311-1323

Abstract: Abstract This study identifies the determinants of bank capital ratios in eight East Asian countries using unbalanced panel data of 278 banks from 2004 to 2014. The results indicate that bank capital decisions are significantly driven by management quality, liquidity, leverage and bank size, as well as bank regulations, indicating that the determinants of bank capital are consistent with past findings for US and European banks. The capital adequacy ratios in East Asia are not linked with banks’ risk appetite. Given that our results show that bank managers generally react negatively to capital requirements, capital regulations should be followed with more rigorous supervisory oversight, to reduce the adverse effects of high capital requirements on bank safety.

Keywords: Capital ratio; bank risk; franchise value; capital adequacy requirement; financial crisis and capital (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:sae:globus:v:20:y:2019:i:6:p:1311-1323

DOI: 10.1177/0972150919848915

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