CHANGING THE GAME; NEW FRAMEWORK OF CAPITAL ADEQUACY RATIO

Amr Abdelbary

MPRA Paper from University Library of Munich, Germany

Abstract: The supervisory committees governed the banking supervision on all over the world which becomes a core activity Since the financial crisis of 2008. Capital adequacy ratio (CAR) is one of the measures which ensure the financial soundness of banks in absorbing a reasonable amount of loss. The objective of this paper is to develop a framework for measuring the capital adequacy by assessing the bank’s risks according to the basics of Basel’s norms in respect of the component of tire 1&2 of capital adequacy. The model used the relationships between equity, deposits, loans and assets to determine the risk ratio, which is calculated in regard of retention ratio. As liquidity risk is usually regulated from a micro prudential perspective, a better knowledge of these interactions among banks may have very important consequences on the design of macro prudential policy.

Keywords: Capital adequacy ratio (CAR); Liquidity; Credit Risk; Loan to Deposits (LTD); Equity to Assets (ETA); Retained Earnings (RE). (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2019-03-05
New Economics Papers: this item is included in nep-ban and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93072

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