Proceedings of the International Conference on Business and Management Research (ICBMR-17) 2017
DOI: 10.2991/icbmr-17.2017.18
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Measuring the Impact of Higher Capital Requirement to Bank Lending Rate and Credit Risk: The Case of Southeast Asian Countries

Abstract: This study discusses the impact of increasing bank capital against lending interest rate, amount of loans, and banks' credit risk exposure. The study utilized panel data from 18 top banks in 5 Southeast Asian countries during the period of 2008-2015. The findings show that there is no significant relationship between capital increase and lending interest rate in Southeast Asia. This is due to lending interest rate movement was driven mostly from banks' cost structure, rather than capital charge. Although lendi… Show more

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“…Interestingly, Pratiwi and Wibowo (2017), based on their panel data analysis comprising 18 top banks of five Southeast Asian countries during 2008–2015, report an insignificant association between higher capital and lending rates. On the other hand, Osborne et al (2017), in their investigation of the association between the capital ratios and lending rates of 13 big banks accounting for 75% of UK bank lending for the period 1998–2012, observe a significant change in the coefficient of the Tier 1 capital ratio in reduced-form regressions for secured household lending rates.…”
Section: Related Literaturementioning
confidence: 99%
“…Interestingly, Pratiwi and Wibowo (2017), based on their panel data analysis comprising 18 top banks of five Southeast Asian countries during 2008–2015, report an insignificant association between higher capital and lending rates. On the other hand, Osborne et al (2017), in their investigation of the association between the capital ratios and lending rates of 13 big banks accounting for 75% of UK bank lending for the period 1998–2012, observe a significant change in the coefficient of the Tier 1 capital ratio in reduced-form regressions for secured household lending rates.…”
Section: Related Literaturementioning
confidence: 99%