Regulation, bank capital, and bank risk: evidence from the Lebanese banking industry
This paper analyzes the relationship between change in capital and change in risk for a sample of 23 Lebanese banks between 2009 and 2014. Using the simultaneous equations model, our evidence reveals that banks determine their capital and risk levels simultaneously, with a negative relationship. Whi...
محفوظ في:
| المؤلف الرئيسي: | |
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| التنسيق: | article |
| منشور في: |
2019
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| الوصول للمادة أونلاين: | http://hdl.handle.net/10725/15009 https://doi.org/10.1057/s41261-019-00111-2 http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php https://link.springer.com/article/10.1057/s41261-019-00111-2 |
| الوسوم: |
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| الملخص: | This paper analyzes the relationship between change in capital and change in risk for a sample of 23 Lebanese banks between 2009 and 2014. Using the simultaneous equations model, our evidence reveals that banks determine their capital and risk levels simultaneously, with a negative relationship. While banks adjust their capital rapidly, they adjust their risk slowly. Furthermore, undercapitalized banks adjust their capital levels more rapidly than well-capitalized banks, and they increase their capital when they decrease their risk. However, there is no conclusive evidence regarding the role of regulatory pressure in driving risk-taking behavior. Finally, there are no major differences in the relationships between capital and risk regardless of whether banks are listed or not. |
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