The role of capital regulation on bank performance Online publication date: Thu, 16-Oct-2014
by Nesrine Ayadi; Younès Boujèlbène
International Journal of Managerial and Financial Accounting (IJMFA), Vol. 6, No. 3, 2014
Abstract: In this paper, we analyse the impact of capital regulation on performance and the risk-taking of 30 European banks. We used a technique of panel data over the period 2004-2009. Results show that capital regulation measured by the ratio capital has a negative and statistically significant risk-taking impact. In addition, regulatory pressure is negatively related to financial performance and positively to bank risk-taking. As a result, a negative and statistically significant relationship was confirmed between credit risk and the return on assets. The results of this study show that both mechanisms 'minimum capital requirements' and 'regulatory pressure' are alternative mechanisms. These mechanisms play a major role in the banks' governance and are the key factors of their performance. Hence, equity strengthening would help solve many of the identified problems and therefore strengthen the stability of the financial system without adversely affecting the banking functioning, their value, their performance or even their shareholders.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Managerial and Financial Accounting (IJMFA):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook