The Impact of CAR on Bank Capital Augmentation in Spain

Yener Altunbas, Santiago Carbo Valverde and Edward P. M. Gardener

Chapter 12 in Bank Strategies and Challenges in the New Europe, 2001, pp 213-231 from Palgrave Macmillan

Abstract: Abstract This chapter reports on tests, using panel methods, of a new capital augmentation model on Spanish savings banks over the period 1987-1996. It is argued that this banking subsector and this time frame provide an interesting laboratory of the potential impact of regulation on bank capital augmentation. Early modelling work in this area is built on by, inter alia, including two previously omitted and key bank portfolio risks (liquidity and interest rate) and a new productive efficiency variable. The results indicate strong evidence of the impact of the new capital adequacy regulatory regime on bank capital augmentation. At the same time the model confirms the importance of bank profitability and productive efficiency in explaining capital augmentation.

Keywords: Generalise Little Square; Saving Bank; Capital Adequacy; Random Effect; Banking Risk (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-333-99276-0_12

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DOI: 10.1057/9780333992760_12

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