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Risk and capital adequacy ratio: evidence from Iranian banks
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Mohammad Solgi *1   , Mohammad Talebi2 |
1- comprehensive university of imam Hossain
2- imam sadegh university |
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Abstract: (20086 Views) |
| The main purpose of banking regulation is promoting banks resilience in crisis and reducing banks risk. This occurs by the market and regulatory pressure. In this paper, we attempt to investigate the causal relationship between capital adequacy ratio (CAR) and risk, adequacy of capital requirement in controlling risk and explore bank's behavior in a different level of capital ratio. Using data of Iranian banks in period of 1389-1394 and simultaneous equation model (SEM), the results show that first, there is mutual causal relationship between risk and capital, second, besides the regulatory pressure, market discipline affect the changes of capital ratio, and finally low-capitalized bank adjust their capital slower than other banks. |
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Full-Text [PDF 1077 kb]
(8021 Downloads)
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Type of Study: Empirical Study |
Subject:
Financial Institutions and Services (G2)
Received: 2017/01/8 | Accepted: 2017/05/31 | Published: 2017/09/24
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