Impact of Basel III framework on financial distress: A case study of Pakistan

Saba, Irum; Ashraf, Hafiz Muhammad Waqas Ashraf; Kouser, Rehana

doi:10.26710/jafee.v3i1.198

Cited by 3 publications

(2 citation statements)

References 35 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Since Basel III requires that different weights be allocated to each category of deposits, it is not possible to accurately calculate these ratios. This gap in reported data has also been stated by other researchers (Hong, Huang, & Wu, 2014; L'Huillier, Rizwan, & Ashraf, 2018; Saba, Ashraf, & Kouser, 2017).…”

Section: Methodssupporting

confidence: 50%

Market discipline in South Asia: Evidence from commercial banking sector

2020

View full text Add to dashboard Cite

The paper investigates the presence of market discipline in the banking sectors of India and Pakistan, using the CAMEL approach and the stringent calculations of liquidity and capital as per Basel II. It employs a fixed effects model to market discipline as reflected in the capital adequacy, asset quality profitability, management and liquidity of banks, with bank size and changes and GDP as control variables, for the years 2008 to 2017. The results show varying degrees of market discipline in both India and Pakistan, which manifest through different variables.

show abstract

Section: Methodssupporting

confidence: 50%

Market discipline in South Asia: Evidence from commercial banking sector

2020

View full text Add to dashboard Cite

show abstract

“…Since these measures were introduced in 2017, however, the data before this point is sparse. Gaps in data for LCR and NSFR have been reported earlier by Afzal et al (2020), Hong et al (2014), L'Huillier et al (2018 and Saba et al (2017). This study has employed the financial soundness indicators laid down by International Monetary Fund (IMF) to measure liquidity.…”

Section: Methodsmentioning

confidence: 99%

Does the market discipline banks? Evidence from Balkan states

Afzal

Firdousi

2022

JRF

View full text Add to dashboard Cite

PurposeThis research is designed to investigate the presence of market discipline in the banking sector, across Balkan states in Europe. Specifically, the effects of CAMEL variables on the cost of funds and deposit-switching have been assessed.Design/methodology/approachThe CAMEL method of bank evaluation has been applied as well as two measures for market discipline (costs of funds and deposit-switching behaviour). Data have been obtained for 10 Balkan states for the 2006–2019 period. For data analysis, ordinary least squares (OLS) and fixed effects models have been utilized. The generalized method of moments (GMM) method has been deployed as well as a dynamic panel model.FindingsEvidence of market discipline has been found, in the form of a higher cost of funds in the context of capital adequacy (but not for other CAMEL variables). Evidence of market discipline in the form of deposit-switching, however, has not been found. In addition, it has been discovered that bank size and gross domestic product (GDP) growth lower the costs of funds for banks.Originality/valueIn the wake of the pandemic, banks need to prepare themselves for very difficult situations and relevant studies can provide help. Therefore, this research has contributed to the developing literature on this topic. In addition, the findings have important practical implications. Results show that banks should maintain adequate levels of capital if they want to control their costs of funds. Results also show that market discipline, in the form of higher costs of funds, can be imposed on banks to discourage excessive risk-taking. Findings highlight the value of appropriate policies and strong supervision of the financial industry. Findings also underline the importance of offering financial incentives to banks. For example, if banks know they will be able to avoid higher costs of funds by controlling their risk levels, they will avoid unrestrained risk-taking.

show abstract

Why Banks Need Adequate Capital Adequacy Ratio? A Study of Lending & Deposit Behaviors of Banking Sector of Pakistan

Narmeen

Saba

Kouser

et al. 2018

JAFEE

Self Cite

View full text Add to dashboard Cite

This study focuses on the impact of Capital Adequacy Ratio on bank’s lending and deposit behavior and also on the importance of maintaining certain level of capital reserve. CAR is examined using two different ratios leverage ratio and risk-based capital ratio. This study is beneficial for the banking industry in determining enough CAR and to make decision for taking deposits and issuing loans. The sample of the study includes 25 banks of Pakistan; 20 conventional and 5 Islamic banks and the study period is of 10 years. Panel data methodology is used. Data is collected from secondary sources. Findings show that CAR has impact on change in capital and change in loans.

show abstract

Impact of Basel III framework on financial distress: A case study of Pakistan

Cited by 3 publications

References 35 publications

Market discipline in South Asia: Evidence from commercial banking sector

Market discipline in South Asia: Evidence from commercial banking sector

Does the market discipline banks? Evidence from Balkan states

Why Banks Need Adequate Capital Adequacy Ratio? A Study of Lending & Deposit Behaviors of Banking Sector of Pakistan

Contact Info

Product

Resources

About