Banks’ capital adequacy ratio: a panacea or placebo

Nupur Moni Das () and Bhabani Sankar Rout ()
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Nupur Moni Das: Sri Sri University
Bhabani Sankar Rout: Siksha “O” Anusandhan (Deemed To Be University)

DECISION: Official Journal of the Indian Institute of Management Calcutta, 2020, vol. 47, issue 3, No 6, 303-318

Abstract: Abstract The changing paradigm of the banking sector regulation has prompted to investigate the inter-linkage of different banking sector variables, viz. capital adequacy ratio, profitability, risk, efficiency and other controlled variables. The study is designed with data for the period 1996–2016 and 43 Indian Commercial Banks. The result of two-stage least squares method reflects that CAR bears a positive association with the risk taking behaviour of the banks. Second, it has been seen that CAR is having a positive association with profitability, but it is adversely associated with efficiency.

Keywords: Capital adequacy ratio; Efficiency; Risk; Profitability; Simultaneous equations (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s40622-020-00255-5

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