How Have Indian Banks Adjusted Their Capital Ratios to Meet the Regulatory Requirements? An Empirical Analysis

• 발행기관: 한국유통과학회
• 저자명: Jalaludeen NAVAS Periyasamy DHANAVANTHAN Daniel LAZAR
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 7 No.11, 1113~1122쪽, 전체 10쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2020.11.30

영문 초록

The purpose of this study is to examine how the Indian banks have adjusted their risk-based capital ratios during 2009–2018 to meet the regulatory requirements. Banks can, in principle, increase their risk-based regulatory capital ratio, either by increasing their levels of regulatory capital or by shrinking their risk-weighted assets by adjusting asset growth or risk in the portfolio. We investigate banks’ capital behavior by decomposing the change in the capital ratio into the contribution of its components and analyzing their variance across regulatory regimes and banks’ ownerships. We further investigate how each component of the capital ratio is adjusted by the banks by breaking down them into balance sheet items. We find that the banks’ capital behavior significantly differed between public and private sector banks and between the two regulatory regimes. During Basel II, banks, in general, followed a strategy of aggressive asset growth with increased risk-taking. The decline in the CRAR because of such an expansionary strategy was adjusted by augmenting additional capital. However, during Basel III, due to higher capital requirements, both in terms of quantity and quality, banks followed a strategy of cutting back their asset growth and reducing the risk in their portfolio to maintain their CRAR.

목차

1. Introduction

2. Literature Review

3. Research Methods and Materials

4. Results and Discussion

5. Conclusion

References

키워드

Capital Adequacy Basel Accords Risk Banking Regulation