EconPapers    
Economics at your fingertips  
 

Banks’ Capital Surplus and the Impact of Additional Capital Requirements

Simona Malovana ()

No 2017/28, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: Banks in the Czech Republic maintain their regulatory capital ratios well above the level required by their regulator. This paper discusses the main reasons for this capital surplus and analyses the impact of additional capital requirements stemming from capital buffers and Pillar 2 add-ons on the capital ratios of banks holding such extra capital. The results provide evidence that banks shrink their capital surplus in response to higher capital requirements. A substantial portion of this adjustment seems to be delivered through changes in average risk weights. For this and other reasons, it is desirable to regularly assess whether the evolution and current level of risk weights give rise to any risk of underestimating the necessary level of capital.

Keywords: Banks; capital requirements; capital surplus; panel data; partial adjustment model (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cfn and nep-rmg
Date: 2017-12, Revised 2017-12
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://ies.fsv.cuni.cz/sci/publication/show/id/5798/lang/en (application/pdf)

Related works:
Working Paper: Banks' Capital Surplus and the Impact of Additional Capital Requirements (2017) Downloads
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: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2017_28

Access Statistics for this paper

More papers in Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Lenka Herrmannova ().

 
Page updated 2019-11-18
Handle: RePEc:fau:wpaper:wp2017_28