The impact of business cycle on capital buffer during the period of Basel-II and Basel-III: Evidence from the Pakistani banks

Iftikhar, Khurram; Iftikhar, Syed Faizan

doi:10.1142/s2424786318500366

Cited by 4 publications

(2 citation statements)

References 19 publications

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“…Yet, there are biases in panel regression analysis that may result in conflicting coefficient values. To account for any potential biases, the dynamic panel model would be estimated using a two-step system GMM estimation technique (Iftikhar & Iftikhar, 2018). This method is considered the best panel regression estimation approach since it removes the endogeneity problem by employing lagged values of explanatory variables as instruments to be used in the equation underestimate (Roodman, 2009).…”

Section: Econometric Techniquementioning

confidence: 99%

Exploring the Channel of Transmission between External Debt and Economic Growth: Evidence from Lower Middle Income Countries

Haque

Iftikhar

Rizvi

2023

Pak. J. Humanit. Soc. Sci

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The study intends to ascertain the pathway through which foreign debt affects GDP growth in lower-middle-income countries (LMICs). High external debt stock has been major source concern for many LMICs in the late 90’s and post financial crises period. Cross-section panel data from 30 countries were studied for the period 1999–2019 using a two-step system (GMM) estimation technique. The sample LMICs were further broken into Asian and African nations and the period was divided into 2010–2019 to assess the impact of post-financial crisis events. The research revealed a strong relationship between external debt and GDP growth via total factor productivity when the entire sample of LMICs was considered. However, the estimations also indicated that TFP is not a channel of transmission in Asian nations in both eras, namely 1999–2010 and the post-financial crisis period of 2010–2019, because foreign debt reduces total factor productivity. Furthermore, considering the entire sample and the post-financial-crisis period in African countries, external debt has a negative but minor connection with TFP. GDP growth shows a large and positive association with TFP in both periods in African countries.

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Section: Econometric Techniquementioning

confidence: 99%

Exploring the Channel of Transmission between External Debt and Economic Growth: Evidence from Lower Middle Income Countries

Haque

Iftikhar

Rizvi

2023

Pak. J. Humanit. Soc. Sci

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“…Studies like Ayuso et al (2004), Lindquist (2004), Atici and Gursoy (2011), and Coffinet et al (2012), have found the negative influence of cyclical behavior on the capital buffer, which indicated the shortsightedness of the banks in the period of the Basel-II Accord that increased the risks during the boom period. However, Jokipii and Milne (2011) and Iftikhar (2018) considered the period of Basel-III, and surprisingly, found a positive relationship between the business cycle and capital requirements. After that, they suggested that banks converted their approach from backward-looking to forward-looking aspects because they had taken appropriate and viable measures during the boom period to ensure the exacting stability of the banking industry, but some authors include an important variable of market structure.…”

Section: Introductionmentioning

confidence: 98%

Capital Buffer in The Presence of Market Structure and Business Cycle: An Assessment

Iftakhar¹

2022

JDSS

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The primary aim of this paper is to check the influence of business cycles and market structure on capital buffers after the implementation of the Basel Accords. To achieve the objective of this study, we considered 34 Pakistani commercial banks over the period from 2006 to 2017 by adopting the two-step system Generalized Method of Moment estimation technique. The empirical findings for the whole period suggest that the impact influence of the business cycle (output gap) on the capital buffer is found to be pro-cyclical. However, when we examined the behavior of the business cycle on the capital buffer in the post-Basel-II period, the sign of output gaps turns to be positive (counter-cyclical). Furthermore, it is important that market structure influence a negative impact on the capital buffer, which indicated that the banks do not take the excessive risk for increasing their profit, so they reduced their level of the capital buffer.

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Does bank capital affect the monetary policy transmission mechanism? A case study of Emerging Market Economies (EMEs)

2019

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The objective of this study is to investigate the impact of bank capital on monetary policy transmission mechanism during the period from 2010 to 2016 for 20 Emerging Market Economics (EMEs) by using the two-step system generalized method of moments (GMM). The coefficient of excess capital in low-asset countries is found to be negative which reveals the importance of excess capital for the effectiveness of monetary transmission. However, the study could not find the significance of excess capital for high-asset countries as they may afford the risky way to generate their income by increasing the loan supply.

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The impact of business cycle on capital buffer during the period of Basel-II and Basel-III: Evidence from the Pakistani banks

Cited by 4 publications

References 19 publications

Exploring the Channel of Transmission between External Debt and Economic Growth: Evidence from Lower Middle Income Countries

Exploring the Channel of Transmission between External Debt and Economic Growth: Evidence from Lower Middle Income Countries

Capital Buffer in The Presence of Market Structure and Business Cycle: An Assessment

Does bank capital affect the monetary policy transmission mechanism? A case study of Emerging Market Economies (EMEs)

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