Abbas, Faisal and Masood, Omar and Ali, Shoaib and Rizwan, Sohail (2021) How do capital ratios affect bank risk-taking: New evidence from the United States. SAGE Open, 11 (1). ISSN 2158-2440, DOI https://doi.org/10.1177/2158244020979678.
Full text not available from this repository.Abstract
This study aims to examine the impact of different capital ratios on Non-Performing loans, Loan Loss Reserves, and Risk-Weighted Assets by studying large commercial banks of the United States. The study employed a two-step system generalized method of movement (GMM) approach by collecting the data over the period ranging from 2002 to 2018. The study finds that using Non-Performing loans and Loan Loss Reserves as a proxy for risk, results support moral hazard hypothesis theory, whereas the results support regulatory hypothesis theory when Risk-Weighted Assets is used as a proxy for risk. The results confirm that the influence of high-quality capital on Non-Performing loans, Loan Loss Reserves, and Risk-Weighted Assets is substantial. The distinctive signs of Non-Performing loans, Loan Loss Reserves, and Risk-Weighted Assets have indications for policymakers. The results are intimate for formulating new guidelines regarding risk mitigation to recognize Non-Performing loans and Loan Loss Reserves and the Risk-Weighted Assets for better results. JEL Classification: G21, G28, G29
| Item Type: | Article |
|---|---|
| Funders: | UNSPECIFIED |
| Uncontrolled Keywords: | Bank capital ratios; Non-performing loans; Loan loss reserves; Risk-weighted assets |
| Subjects: | H Social Sciences > HG Finance H Social Sciences > HG Finance > Banking |
| Depositing User: | Ms. Juhaida Abd Rahim |
| Date Deposited: | 08 Mar 2022 07:48 |
| Last Modified: | 08 Mar 2022 07:48 |
| URI: | http://eprints.um.edu.my/id/eprint/26498 |
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