The nexus between Basel capital requirements, risk-taking and profitability
What about emerging economies
Bibliographic Data
| ID | 15066925 |
|---|---|
| Authors | Ghulam Mujtaba (0000-0002-7317-4357, Hubei University of Economics, corresponding author), Yasmeen Akhtar (0000-0001-6807-5349, COMSATS University Islamabad), Saira Ashfaq (0000-0002-9049-9823, Department of Management Science, Bahria University Islamabad, Islamabad, Pakistan), Imran Abbas Jadoon (0000-0003-2476-4745, COMSATS University Islamabad), Syeda Mahlaqa Hina (COMSATS University Islamabad) |
| Year | 2022 |
| Volume | 35 |
| Issue | 1 |
| Pages | 230-251 |
| Publication date | 2022-12-31 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economic Research-Ekonomska Istraživanja (JOURNAL) |
| Journal identifiers | ISSN: 1331-677X • E-ISSN: 1848-9664 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/1331677x.2021.1890177 |
| OpenAlex | W3134515514 |
| Language | EN |
| References cited | 37 |
The study examines the nexus between Basel capital requirements, banking sector risk-taking, and profitability in Asian emerging markets by using dynamic panel GMM methodology. The findings of the study suggest that regulatory capital positively affects risk-taking which validates the “regulatory hypothesis.” The findings also reveal that regulatory capital positively while risk negatively affects the profitability in the banking sector. The current study finds the bidirectional causality between the regulatory capital and risk-taking, implying that banks with higher capital ratios are expected to increase in risk-taking and vice versa. The findings also suggest that managerial ownership positively affects while foreign ownership negatively impacts risk-taking consistent with the agency theory of corporate governance. The study proposes that ownership structure has a significant influence on bank risk and profitability, however, the combined impact of regulatory capital through its interaction with the ownership structure is not proved to be significant
Basel II · Basel III · Business · Capital adequacy ratio · Capital formation · Capital requirement · Econometrics · Economic capital · Economics · Financial capital · Human capital · Market economy · Microeconomics · Monetary economics · Panel data · Profitability index · Risk management · Risk-adjusted return on capital · Banking stability, regulation, efficiency · Corporate Finance and Governance · Islamic Finance and Banking Studies · Finance
| Citation velocity | historical |
|---|---|
| Highly cited | No |