The Determinants of Bank Capital for East Asian Countries

Ahmad, Rubi and Albaity, Mohamed (2019) The Determinants of Bank Capital for East Asian Countries. Global Business Review, 20 (6). pp. 1311-1323. ISSN 0972-1509, DOI https://doi.org/10.1177/0972150919848915.

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Official URL: https://doi.org/10.1177/0972150919848915

Abstract

This study identifies the determinants of bank capital ratios in eight East Asian countries using unbalanced panel data of 278 banks from 2004 to 2014. The results indicate that bank capital decisions are significantly driven by management quality, liquidity, leverage and bank size, as well as bank regulations, indicating that the determinants of bank capital are consistent with past findings for US and European banks. The capital adequacy ratios in East Asia are not linked with banks’ risk appetite. Given that our results show that bank managers generally react negatively to capital requirements, capital regulations should be followed with more rigorous supervisory oversight, to reduce the adverse effects of high capital requirements on bank safety. © 2019 International Management Institute, New Delhi.

Item Type: Article
Funders: UNSPECIFIED
Uncontrolled Keywords: Capital ratio; bank risk; franchise value; capital adequacy requirement; financial crisis and capital
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Divisions: Faculty of Business and Economics
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 20 May 2020 02:14
Last Modified: 20 May 2020 02:14
URI: http://eprints.um.edu.my/id/eprint/24360

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