Determinants of Capital Adequacy Ratio in the Banking Sector: Evidence from the Arab Region

Q4 Business, Management and Accounting

International Journal of Business and Management Science Pub Date : 2023-07-30 DOI:10.5539/ijbm.v18n5p63

Rami Obeid

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引用次数: 1

Abstract

The capital adequacy ratio is one of the most important indicators used to assess the ability of the banking sector to absorb shocks. Therefore, central banks have paid attention to the importance of monitoring this ratio on an ongoing basis, given the vital role of the banking sector in supporting the economy. In this paper, we investigate the banking and economic factors that could affect the capital adequacy ratio in the Arab banking sector, by using dynamic panel data model for a panel of 35 banks spread across seven Arab countries during the period 2015 to 2020. The results show that there is a positive and significant relationship between credit risk (ratio of non-performing loans to total loans) and the size of the bank on the one hand, and capital adequacy ratio on the other hand. There is also a negative significant relationship between bank profitability (return on assets) and capital adequacy ratio, while there is no significant relationship between dynamic provisions and capital adequacy ratio. Finally, regarding the role of economic variables, the study shows that the real GDP growth rate has a significant positive impact on the capital adequacy ratio in the Arab region.

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银行业资本充足率的决定因素:来自阿拉伯地区的证据

资本充足率是用来评估银行业吸收冲击能力的最重要指标之一。因此，鉴于银行业在支持经济方面的重要作用，各国央行已经注意到持续监测这一比率的重要性。在本文中，我们研究了可能影响阿拉伯银行业资本充足率的银行和经济因素，通过使用动态面板数据模型，对2015年至2020年期间分布在七个阿拉伯国家的35家银行进行了面板分析。结果表明，信贷风险(不良贷款占总贷款的比例)与银行规模、资本充足率之间存在显著正相关关系。银行盈利能力(资产收益率)与资本充足率之间也存在显著的负相关关系，而动态拨备与资本充足率之间没有显著的关系。最后，关于经济变量的作用，研究表明，实际GDP增长率对阿拉伯地区资本充足率有显著的正向影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of Business and Management Science Business, Management and Accounting-Business and International Management

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期刊介绍： The International Journal of Business and Management Science (IJBMS) (Print: ISSN 1837-6614; Online: 1985-692X) is a double-blind peer-reviewed semiannual journal. Generally the journal publishes the articles that expand knowledge on business and management issues. Business Complexity and Performance Management were the two of the top ten problems IJBMS cover pageof 20th century management. In the 21st century, overcoming such problems seem to be challenging to educators and practitioners. Do educators and practitioners agree on which management skills are required for success in the 21st century? These all issues call for substantial research to achieve a very modern sustainable business era of the global economy. IJBMS intends to focus on the business and management issues with the vision of sustainable competitiveness along with scientific evidences. The quantitative approach for analyzing a research problem is promoted by IJBMS.