IDEAS home Printed from https://ideas.repec.org/h/spr/prbchp/978-981-97-6242-2_1.html
   My bibliography  Save this book chapter

Cyclicality of Banks’ Capital Buffer, Credit Risk, and Performance: Evidence from an Emerging Economy

In: Financial Markets and Corporate Finance

Author

Listed:
  • Rosy Chauhan

    (Indian Institute of Technology Roorkee)

  • Anil K. Sharma

    (Indian Institute of Technology Roorkee)

Abstract

We analyze the impact of the business cycle and earnings diversification on the performance, credit risk, and capital buffer of Indian commercial banks spanning from 2008 to 2021. Employing fixed effects panel estimation, the study reveals a significant negative correlation between the capital buffer and the business cycle, while credit risk and bank performance demonstrate positive and significant associations with the business cycle. Consequently, our research supports the claim that the Basel III accords, specifically those addressing countercyclical capital buffer requirements, play a role in enhancing the stability of financial institutions, particularly during economic downturns. However, our findings do not align with the perceived benefits of diversifying into activities that generate non-interest income.

Suggested Citation

  • Rosy Chauhan & Anil K. Sharma, 2024. "Cyclicality of Banks’ Capital Buffer, Credit Risk, and Performance: Evidence from an Emerging Economy," Springer Proceedings in Business and Economics, in: Shveta Singh & Sonali Jain (ed.), Financial Markets and Corporate Finance, chapter 0, pages 1-23, Springer.
    • Handle: RePEc:spr:prbchp:978-981-97-6242-2_1
    DOI: 10.1007/978-981-97-6242-2_1
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:prbchp:978-981-97-6242-2_1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.