Economics at your fingertips  

Impact of Basel III framework on financial distress: A case study of Pakistan

Irum Saba, Hafiz Muhammad Waqas Ashraf Ashraf and Rehana Kouser

Journal of Accounting and Finance in Emerging Economies, 2017, vol. 3, issue 1, 1-20

Abstract: Purpose: New liquidity rules phased under the Basel lll define the new stable funding ratios (NSFR) increase the stability of the funding structure of the financial institution. Using a Pakistani banking data, we tested the relevance of both Structural liquidity and Capital ratios as defined in the Basel lll. We used the broad definition of the failure and distress to check the status of the banking sector. If the banks fail, then it denoted by 1 otherwise 0.& We use the logistic regression in our study. Estimate from several versions of the logistic probability model indicate that the likelihood of failure and distress decrease with increase liquidity holding while capital ratios are not significant. Our result provides support for the Basel lll that the NSFR has the inverse relation with the bank failure and distress. This study also compared the two versions of the NSFR. NSFR-10 and NSFR-14 are the two versions. Our analysis tells that the NSFR-14 is more reliable as compare to the NSFR-10. We also check the bank situations whether it lies in the failure and distress condition or in active banks. In this study we also check the other variables that have an important impact on the stability and failure and distress of the banks.

Keywords: G21; G33; G32; Framework; Financial distress (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (application/pdf)

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:

DOI: 10.26710/jafee.v3i1.198

Access Statistics for this article

More articles in Journal of Accounting and Finance in Emerging Economies from CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan Contact information at EDIRC.
Bibliographic data for series maintained by Rabia Rasheed ().

Page updated 2023-01-16
Handle: RePEc:src:jafeec:v:3:y:2017:i:1:p:1-20