How commercial banks adjust capital ratios: Empirical evidence from the USA?‎

This study examines the speed of adjustment of the leverage and regulatory capital ratios between 2002 and 2018 for large commercial banks of the USA. The study applies a two-step system GMM technique to obtain the speed of adjustment. The results prove that higher-quality capital requires greater t...

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Autores principales:	Faisal Abbas, Shoaib Ali, Imran Yousaf, Sohail Rizwan
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2020
Materias:	leverage ratio regulatory ratios capital buffer ratio speed of adjustment Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/e1b98962b9464b30ab7f1ef1f27b1eb9
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spelling	oai:doaj.org-article:e1b98962b9464b30ab7f1ef1f27b1eb92021-12-02T17:01:03ZHow commercial banks adjust capital ratios: Empirical evidence from the USA?‎2331-197510.1080/23311975.2020.1859848https://doaj.org/article/e1b98962b9464b30ab7f1ef1f27b1eb92020-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2020.1859848https://doaj.org/toc/2331-1975This study examines the speed of adjustment of the leverage and regulatory capital ratios between 2002 and 2018 for large commercial banks of the USA. The study applies a two-step system GMM technique to obtain the speed of adjustment. The results prove that higher-quality capital requires greater time to restore equilibrium after an economic shock. The results also show that large commercial banks adjust their regulatory ratios faster than leverage ratios. Furthermore, the speed of adjustment is heterogeneous for cross-sections. The speed of adjustment for well-capitalized banks is higher than adequately and undercapitalized commercial banks. The speed of adjustment for highly liquid is higher than low liquid banks. This study also finds the banks quickly adjust their capital before the crisis period. The heterogeneous results have implications for regulators, policymakers, and bank managers for better decision making.Faisal AbbasShoaib AliImran YousafSohail RizwanTaylor & Francis Grouparticleleverage ratioregulatory ratioscapital buffer ratiospeed of adjustmentBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 7, Iss 1 (2020)
institution	DOAJ
collection	DOAJ
language	EN
topic	leverage ratio regulatory ratios capital buffer ratio speed of adjustment Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	leverage ratio regulatory ratios capital buffer ratio speed of adjustment Business HF5001-6182 Management. Industrial management HD28-70 Faisal Abbas Shoaib Ali Imran Yousaf Sohail Rizwan How commercial banks adjust capital ratios: Empirical evidence from the USA?‎
description	This study examines the speed of adjustment of the leverage and regulatory capital ratios between 2002 and 2018 for large commercial banks of the USA. The study applies a two-step system GMM technique to obtain the speed of adjustment. The results prove that higher-quality capital requires greater time to restore equilibrium after an economic shock. The results also show that large commercial banks adjust their regulatory ratios faster than leverage ratios. Furthermore, the speed of adjustment is heterogeneous for cross-sections. The speed of adjustment for well-capitalized banks is higher than adequately and undercapitalized commercial banks. The speed of adjustment for highly liquid is higher than low liquid banks. This study also finds the banks quickly adjust their capital before the crisis period. The heterogeneous results have implications for regulators, policymakers, and bank managers for better decision making.
format	article
author	Faisal Abbas Shoaib Ali Imran Yousaf Sohail Rizwan
author_facet	Faisal Abbas Shoaib Ali Imran Yousaf Sohail Rizwan
author_sort	Faisal Abbas
title	How commercial banks adjust capital ratios: Empirical evidence from the USA?‎
title_short	How commercial banks adjust capital ratios: Empirical evidence from the USA?‎
title_full	How commercial banks adjust capital ratios: Empirical evidence from the USA?‎
title_fullStr	How commercial banks adjust capital ratios: Empirical evidence from the USA?‎
title_full_unstemmed	How commercial banks adjust capital ratios: Empirical evidence from the USA?‎
title_sort	how commercial banks adjust capital ratios: empirical evidence from the usa?‎
publisher	Taylor & Francis Group
publishDate	2020
url	https://doaj.org/article/e1b98962b9464b30ab7f1ef1f27b1eb9
work_keys_str_mv	AT faisalabbas howcommercialbanksadjustcapitalratiosempiricalevidencefromtheusa AT shoaibali howcommercialbanksadjustcapitalratiosempiricalevidencefromtheusa AT imranyousaf howcommercialbanksadjustcapitalratiosempiricalevidencefromtheusa AT sohailrizwan howcommercialbanksadjustcapitalratiosempiricalevidencefromtheusa
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How commercial banks adjust capital ratios: Empirical evidence from the USA?‎

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