The Impact of BASEL Accords on the Management of Vietnamese Commercial Banks

Pham, Hai Long; Daly, Kevin

doi:10.3390/jrfm13100228

Cited by 9 publications

(4 citation statements)

References 32 publications

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“…Nguyen (2020) finds a positive relationship between CAR and ROA for small-sized banks and a significant effect with Basel II implementation, but this relationship does not hold for large-sized banks. The management of the banks should strengthen the net income to increase the ROA and ROE (Pham and Daly, 2020;Sultan et al, 2021). Aspal and Nazneen (2014) examine the determinants of CAR in India from the 2008 to 2012 period.…”

Section: Empirical Evidencementioning

confidence: 99%

Examining the Bank-Specific and Macro-Economic Factors that Influence Capital Adequacy in Pakistan

Mustafa

Mumtaz

2022

IJMRES

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The capital adequacy ratio is a dominant factor in the banking system because it identifies its strength against riskiness. This study empirically investigates the relationship of bank-specific and macro-economic factors on CAR using 26 Pakistani banks for the 2006 to 2018 period. This study applies a fixed-effect model to examine the bank-specific and macro-economic factors that influence capital adequacy. We find that a bank’s size, loan loss reserves, and leverage significantly influence capital adequacy. At the same time, interest rate appears to be a significant macro-economic variable that affects the banks' capital adequacy. When we include bank-specific and macro-economic factors, liquidity risk significantly impacts CAR. Based on the classification of bank ownership, we find that NPLs of public banks negatively affect CAR; however, foreign and local banks' net interest margin is a significant factor in increasing the banks' capital base and positively affecting CAR. Furthermore, the leverage of local banks is a significant determinant that illustrates that investment in risky assets reduces the CAR. This study also reports that a financial crisis impacts capital to risk-weighted assets of the local banks. Large banks are more diversified than small banks, and ROA, NPL, leverage, loan loss reserve, and crisis are essential factors that cause large banks' CAR. To test the robustness of the results, the equity to assets ratio (ETA) is used as a dependent variable and finds that ROE and market capitalization are the robust predictors.

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Section: Empirical Evidencementioning

confidence: 99%

Examining the Bank-Specific and Macro-Economic Factors that Influence Capital Adequacy in Pakistan

Mustafa

Mumtaz

2022

IJMRES

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“…One of the conventional objective functions in the field of ALM is the objective function based on the maximization of bank profit, and in the proposed models based on this objective function, it is difficult to apply changes in the existing parameters to reach the optimal values of the balance sheet and income statement parameters. Also, in the conducted studies, no special effort has been made to reduce the size of the balance sheet [101][102][103][104][105][106][107][108][109][110][111][112]. But, this article has tried to eliminate this gap in the studies conducted in the past.…”

Section: Introductionmentioning

confidence: 99%

Optimization of Asset and Liability Management of Banks with Minimum Possible Changes

et al. 2023

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Asset-Liability Management (ALM) of banks is defined as simultaneous planning of all bank assets and liabilities under different conditions and its purpose is to maximize profits and minimize the risks in banks by optimizing the parameters in the balance sheet. Most of the studies `and proposed models in the ALM field are based on an objective function that maximizes bank profit. It is not easy to apply changes in these models in order to reach the optimal values of the parameters in the balance sheet. In this article, an attempt has been made to propose a linear model using constraints to achieve optimal values of balance sheet parameters using ALM objectives and considering balance sheet, system and regulatory constraints. It has also been tried to design the model according to the most possible mode and with the least changes and to minimize the size of the balance sheet. The analysis of the model presented in this article has been conducted using the parameters of the balance sheet and income statement of one of the famous Iranian banks. The results obtained from the proposed model show that the values of cash and receivables from banks and other credit institutions have decreased by 30% and increased by 200%, respectively, compared to the actual values of these parameters. Also, Total Income, Operating Income and Non-Operating Income have grown by 30% compared to the actual values of these parameters. Also, the values of a number of parameters are estimated to be zero after optimization. According to the results, it is obvious that the performance of bank managers, especially in the management of bank assets, is significantly different from the optimal values of the balance sheet, and the results obtained from the proposed model can help the management of banks as much as possible.

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“…According to International Monetary Fund's (IMF) compilation guide for 2019, capital adequacy is a key indicator of the financial soundness of banks. Studies have shown that bank capital requirements can promote financial stability through behavior modification (Bhatta, 2015) and that regulatory capital requirements can improve banks' financial performance and reduce risk-taking (Pham & Daly 2020). A study by Ghulam et al, (2021) examined the nexus between Basel capital requirements, Asian emerging markets profitability, and risk in the banking sector and found that regulatory capital has a positive effect on profitability while risk has a negative effect.…”

Section: Introductionmentioning

confidence: 99%

“…Studies have shown that the Basel II framework of capital adequacy regulations has not effectively curbed risk-taking behavior in the banking industry (Demirguc-Kunt, et al, 2006;Janson, 2009). However, other research suggests moral hazard risk due to capital requirements, although it may negatively impact profitability (Hellmann et al, 2000;Lee & Hsieh, 2013;Pham & Daly, 2020). The main macroeconomic benefit of higher capital requirements is increased resilience in the banking sector and a reduced likelihood of a banking crisis, but there may also be temporary costs related to slower GDP growth due to higher financing costs for banks and the economy as a whole.…”

Section: Introductionmentioning

confidence: 99%

Exploring Higher Capital Requirements in Nepal Under Basel III: A Qualitative Approach

Acharya

Nepal

Kafle

2023

IJQR

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This paper explored the impact of capital regulation on the banking industry in Nepal and sought to understand the reasons behind the requirements for higher capital in the country compared to global standards set by the Basel Committee on Banking Supervision (BCBS). The paper incorporated semi-structured interviews with experts from banks and the Nepal Rastra Bank (NRB) and employed thematic analysis to analyze the responses. The main factors driving higher capital requirements in Nepal were identified as risk management practices, financial stability, and the cost of financing, including the supervisory review process and the internal control systems of banks. The study found that the banking industry in Nepal lacks strong risk management policies and practices and that the regulator places a greater emphasis on ensuring the stability and resilience of banks rather than minimizing the economic cost of financing. Additionally, the corporate governance and internal control systems of banks in Nepal were found to be suboptimal.

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The Impact of BASEL Accords on the Management of Vietnamese Commercial Banks

Cited by 9 publications

References 32 publications

Examining the Bank-Specific and Macro-Economic Factors that Influence Capital Adequacy in Pakistan

Examining the Bank-Specific and Macro-Economic Factors that Influence Capital Adequacy in Pakistan

Optimization of Asset and Liability Management of Banks with Minimum Possible Changes

Exploring Higher Capital Requirements in Nepal Under Basel III: A Qualitative Approach

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