How do Banks Implement the Capital Regulation Requirement?

• Autorzy: Ho Thanh Tung , Jaroslav Belás , Tatyana Baideldinova
• Języki publikacji: EN

Abstrakty

EN

This paper studies the capital regulation implementation by commercial banks. Specifically, the authors examine how commercial banks achieve the required capital regulation requirements in the context of the Basel regulation frameworks and whether this compliance promotes banks' efficiency. The authors use partial adjustment models to analyse the banks' quarterly financial statement releases in both pre- and post-regulation periods. On average, the empirical evidence shows that the commercial banks pursued credit growth at a higher priority than capital regulation requirements. Retained earnings and risk-weighted assets are permutations to account for the bulk of both higher risk-weighted capital ratio and capital-to-total-assets ratio, while the shares' issuance played a lesser role. In the post-regulation period, the banks adjusted to the risk-weighted capital target faster than in the pre-regulation period. Adjustment to the capital-on-total-assets ratio was slower. The authors find that the manner of the adjustment by these commercial banks to the capital target led to a loss in efficiency. The result implies the need to tighten the capital regulation implementation and improve risk-weighted assets management. (original abstract)

Słowa kluczowe

EN

Commercial banks; Bank regulations; Banks' efficiency

PL

Banki komercyjne; Regulacje bankowe; Efektywność banków

• Czasopismo: Journal of International Studies
• Rocznik: 2018
• Tom: 11
• Numer: nr 3
• Strony: 161--175

Twórcy

autor

Ho Thanh Tung

• Tomas Bata University in Zlin, Czech Republic; Ton Duc Thang University, Hochiminh city, Vietnam

autor

Jaroslav Belás

• Tomas Bata University in Zlín, Czech Republic

autor

Tatyana Baideldinova

• Al-Farabi Kazakh National University, Kazakhstan

Bibliografia

• Adrian, T., & Shin, H. S. (2010). Liquidity and leverage. Journal of Financial Intermediation, 19(3), 418-437. https://doi.org/10.1016/j.jfi.2008.12.002
• Aiyar, S., Calomiris, C. W., & Wieladek, T. (2016). How does credit supply respond to monetary policy and bank minimum capital requirements?. European Economic Review, 82, 142-165. https://doi.org/10.1016/j.euroecorev.2015.07.021
• Allen, B., Chan, K. K., Milne, A., & Thomas, S. (2012). Basel III: Is the cure worse than the disease? International Review of Financial Analysis, 25, 159-166. https://doi.org/10.1016/j.irfa.2012.08.004
• Angkinand, A. P. (2009). Banking regulation and the output cost of banking crises. Journal of International Financial Markets, Institutions and Money, 19(2), 240-257. https://doi.org/10.1016/j.intfin.2007.12.001
• Aniunas, P., Gipiene, G., Valukonis, M., & Vijuna, M. (2017). Liquidity risk management model for local banks. Transformations in Business & Economics, 16(1), 153-172.
• Apătăchioae, A. (2015). The Performance, Banking Risks and their Regulation. Procedia Economics and Finance, 20, 35-43. https://doi.org/10.1016/S2212-5671(15)00044-1
• Balcerzak, A. P., Kliestik, T., Streimikiene, D., & Smrčka, L. (2017). Non-parametric approach to measuring the efficiency of banking sectors in European Union Countries. Acta Polytechnica Hungarica, 14(7), 51-70.
• Barth, J. R., Lin, C., Ma, Y., Seade, J., & Song, F. M. (2013). Do bank regulation, supervision and monitoring enhance or impede bank efficiency?. Journal of Banking & Finance, 37(8), 2879-2892. https://doi.org/10.1016/j.jbankfin.2013.04.030
• Bhasin, M. (2016). Challenge of mitigating bank frauds by judicious mix of technology: Experience of a developing country. Economics, Management and Sustainability, 1(1), 23-41. https://doi.org/10.14254/jems.2016.1-1.3
• Bobriková, M. & Harčariková, M. (2017). Financial engineering with options and its implementation for issuing of new financial innovations. Montenegrin Journal of Economics, 13(3), 7-18.
• Boot, A. W., & Thakor, A. V. (1997). Financial system architecture. Review of Financial Studies, 10(3), 693-733.
• Cipovova, E., & Belas, J. (2012). Assessment of Credit Risk Approaches in Relation with Competitiveness Increase of the Banking Sector. Journal of Competitiveness, 4(2), 69-84. https://doi.org/10.7441/joc.2012.02.05
• Cohen, B. H., Scatigna, M., & Bank for International Settlements. (2014). Banks and capital requirements: channels of adjustment.
• Cook, D. O., & Tang, T. (2010). Macroeconomic conditions and capital structure adjustment speed. Journal of Corporate Finance, 16(1), 73-87. https://doi.org/10.1016/j.jcorpfin.2009.02.003
• Dang, V. A., Kim, M., & Shin, Y. (2014). Asymmetric adjustment toward optimal capital structure: Evidence from a crisis. International Review of Financial Analysis, 33, 226-242. https://doi.org/10.1016/j.irfa.2014.02.013
• De Jonghe, O., & Öztekin, Ö. (2015). Bank capital management: International evidence. Journal of Financial Intermediation, 24(2), 154-177. https://doi.org/10.1016/j.jfi.2014.11.005
• Duhnea, C., Vancea, D.P.C., Frecea, L.-G. (2017). IPO Underpricing in Emerging Capital Markets: A Comparative Study of Romania, Bulgaria and Hungaryю Transformations in Business & Economics, 16(2A), 478-494.
• Fiordelisi, F., Marques-Ibanez, D., & Molyneux, P. (2011). Efficiency and risk in European banking. Journal of Banking & Finance, 35(5), 1315-1326. https://doi.org/10.1016/j.jbankfin.2010.10.005
• Fratzscher, M., König, P. J., & Lambert, C. (2016). Credit provision and banking stability after the Great Financial Crisis: The role of bank regulation and the quality of governance. Journal of International Money and Finance, 66, 113-135. https://doi.org/10.1016/j.jimonfin.2016.02.015
• Gavurova, B., Belas, J., Kocisova, K., Kliestik, T. (2017). Comparison of Selected Methods for Performance Evaluation of Czech and Slovak Commercial Banks. Journal of Business Economics and Management, 18(5), 852-876 https://doi.org/10.3846/16111699.2017.1371637
• Gombola, M. J., Ho, A. Y.-F., & Huang, C.-C. (2016). The effect of leverage and liquidity on earnings and capital management: Evidence from U.S. commercial banks. International Review of Economics & Finance, 43, 35-58. https://doi.org/10.1016/j.iref.2015.10.030
• Gorton, G., & Winton, A. (2003). Financial intermediation. Handbook of the Economics of Finance, 1, 431-552.
• Hovakimian, A., & Li, G. (2011). In search of conclusive evidence: How to test for adjustment to target capital structure. Journal of Corporate Finance, 17(1), 33-44. https://doi.org/10.1016/j.jcorpfin.2010.07.004
• Kliestik, T., Misankova, M., Valaskova, K., & Svabova, L. (2018). Bankruptcy prevention: new effort to reflect on legal and social changes, Science and Engineering Ethics, 24(2), 791-803. https://doi.org/10.1007/s11948-017-9912-4
• Kodasheva, G, Parusimova, N, Rispekova, M. & Uchkampirova, A. (2017). Actual problems of development of the banking sector in the economy of Kazakhstan. Banks and Bank Systems, 12(3), 257-268. doi:10.21511/bbs.12(3-1).2017.10
• Kozmenko, S, Shkolnyk, I., & Bukhtiarova, A. (2016). Dynamics patterns of banks evaluations on the basis of Kohonen self-organizing maps. Banks and Bank Systems, 11(4-1), 179-192. doi:10.21511/bbs.11(4-1).2016.09
• Kozmenko, S., & Belova, I, (2015). Peculiarities of identification of systemically important banks and assessment of their impact of the occurrence of economic crisis. Banks and Bank Systems, 10(3), 39-48.
• Kozubíková, L., Homolka, L., & Kristalas, D. (2017). The Effect of Business Environment and Entrepreneurs' Gender on Perception of Financial Risk in The Smes Sector. Journal of Competitiveness, 9(1), 36-50. https://doi.org/10.7441/joc.2017.01.03
• Kozubíková, L., Belás, J., Bilan, Y., & Bartoš, P. (2015). Personal characteristics of entrepreneurs in the context of perception and management of business risk in the SME segment. Economics and Sociology, 8(1), 41-54. https://doi.org/10.14254/2071-789X.2015/8-1/4
• Kunitsyna, N., Britchenko, I., & Kunitsyn, I. (2018). Reputational risks, value of losses and financial sustainability of commercial banks. Entrepreneurship and Sustainability Issues, 5(4), 943-955. https://doi.org/10.9770/jesi.2018.5.4(17)
• Lazányi, K., Virglerová, Z., Dvorský, J., & Dapkus, R. (2017). An Analysis of Factors Related to" Taking Risks", according to Selected Socio-Demographic Factors. Acta Polytechnica Hungarica, 14(7), 35-50.
• Lee, T.-H., & Chih, S.-H. (2013). Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks. The North American Journal of Economics and Finance, 26, 705-724. https://doi.org/10.1016/j.najef.2013.05.005
• Ly, K. C., Chen, Z., Wang, S., & Jiang, Y. (2017). The Basel III net stable funding ratio adjustment speed and systemic risk. Research in International Business and Finance, 39, 169-182. https://doi.org/10.1016/j.ribaf.2016.07.031
• Manlagnit, M. C. V. (2015). Basel regulations and banks' efficiency: The case of the Philippines. Journal of Asian Economics, 39, 72-85. https://doi.org/10.1016/j.asieco.2015.06.001
• Ohanyan G., & Androniceanu, A. (2017). Evaluation of IMF program effects on employment in the EU. Acta Oeconomica, 67(3), 311-332.
• Pessarossi, P., & Weill, L. (2015). Do capital requirements affect cost efficiency? Evidence from China. Journal of Financial Stability, 19, 119-127. https://doi.org/10.1016/j.jfs.2014.11.002
• Popovic, Z. & Paunovic, M. (2018).The Dependence of the Cost of Capital on Degree of Diversification. Montenegrin Journal of Economics, 14(1), 53-67.
• Shimizu, K. (2015). Adjusting denominators of capital ratios: Evidence from Japanese banks. Journal of Financial Stability, 19, 60-68. https://doi.org/10.1016/j.jfs.2015.05.005
• Tung, H. T. (2017). Adjustment of interbank lending in pre- and post-regulation periods: Empirical analysis of Vietnamese commercial banks. Journal of International Studies, 10(3), 64-76. https://doi.org/10.14254/2071-8330.2017/10-3/5
• Xu, J. X., Li, N., & Ahmad, M. I. (2018). Banking performance of China and Pakistan. Entrepreneurship and Sustainability Issues, 5(4), 929-942. https://doi.org/10.9770/jesi.2018.5.4(16)
• Zhou, Q., Tan, K. J. K., Faff, R., & Zhu, Y. (2016). Deviation from target capital structure, cost of equity and speed of adjustment. Journal of Corporate Finance, 39, 99-120. https://doi.org/10.1016/j.jcorpfin.2016.06.002

Identyfikatory

DOI

10.14254/2071-8330.2018/11-3/14