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Determinants of the Capital Level of Banks in Hong Kong

In: The Banking Sector in Hong Kong

Author

Listed:
  • Jim Wong
  • Ka-Fai Choi
  • Tom Pak-Wing Fong

Abstract

Banks incorporated in Hong Kong generally maintain a capital adequacy ratio (CAR) well above the regulatory requirement.1 For example, the average CAR of licensed banks was 28.3 per cent in the second quarter of 2004, against an average required minimum of just 10.3 per cent.2 This phenomenon is also common in other economies.3 It raises the question of what factors determine the actual amount of capital held by banks and, specifically, whether changes in regulatory requirements can affect the level of bank capital.4

Suggested Citation

  • Jim Wong & Ka-Fai Choi & Tom Pak-Wing Fong, 2008. "Determinants of the Capital Level of Banks in Hong Kong," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Hans Genberg & Cho-Hoi Hui (ed.), The Banking Sector in Hong Kong, chapter 8, pages 159-190, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-0-230-22737-8_8
    DOI: 10.1057/9780230227378_8
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    Cited by:

    1. Shahchera , Mahshid, 2013. "The Determinants of Banks' Capital Structure: The case of Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(1), pages 141-167, January.
    2. Quang Thi Thieu Nguyen & Christopher Gan & Zhaohua Li, 2020. "Capital regulation and bank balance sheet adjustments: a simultaneous approach," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1563-1599, June.
    3. Marques Pereira, João André C. & Saito, Richard, 2015. "How banks respond to Central Bank supervision: Evidence from Brazil," Journal of Financial Stability, Elsevier, vol. 19(C), pages 22-30.
    4. Kamal Naser & Abdullah Al-Mutairi & Ahmad Al Kandari & Rana Nuseibeh, 2015. "Cogency of Capital Structure Theories to an Islamic Country: Empirical Evidence from the Kuwaiti Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 979-988.
    5. Maria Kasselaki & Athanasios Tagkalakis, 2014. "Financial soundness indicators and financial crisis episodes," Annals of Finance, Springer, vol. 10(4), pages 623-669, November.
    6. Abdullah AL-Mutairi & Kamal Naser, 2015. "Determinants of Capital Structure of Banking Sector in GCC: An Empirical Investigation," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(7), pages 959-972, July.
    7. Miss Rita Babihuga, 2007. "Macroeconomic and Financial Soundness Indicators: An Empirical Investigation," IMF Working Papers 2007/115, International Monetary Fund.
    8. Yakup Asarkaya & Serkan Özcan, 2007. "Determinants of Capital Structure in Financial Institutions: The Case of Turkey," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 1(1), pages 91-109.

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