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Risk and capital adequacy ratio: evidence from Iranian banks (in Persian)

Author

Listed:
  • Solgi, Mohammad

    (comprehensive university of imam Hossain)

  • Talebi, Mohammad

    (imam sadegh university)

Abstract

The main purpose of banking regulation is promoting banks resilience in crisis and reducing banks risk. This occurs by the market and regulatory pressure. In this paper, we attempt to investigate the causal relationship between capital adequacy ratio (CAR) and risk, adequacy of capital requirement in controlling risk and explore bankchr('39')s behavior in a different level of capital ratio. Using data of Iranian banks in period of 1389-1394 and simultaneous equation model (SEM), the results show that first, there is mutual causal relationship between risk and capital, second, besides the regulatory pressure, market discipline affect the changes of capital ratio, and finally low-capitalized bank adjust their capital slower than other banks.

Suggested Citation

  • Solgi, Mohammad & Talebi, Mohammad, 2017. "Risk and capital adequacy ratio: evidence from Iranian banks (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(30), pages 513-543, January.
    • Handle: RePEc:mbr:jmbres:v:9:y:2017:i:30:p:513-543
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    Cited by:

    1. Afshari , Zahra & Bagherzadeh , Mahsa, 2017. "Capital Adequacy Ratio and Financing Behavior in Iran’s Banking System," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(3), pages 235-249, July.

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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