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This research explores the balanced panel data to examine the level of capital adjustment for major insured commercial banks over the 2002-2018 period using a two-step GMM estimator. The findings show that the speed of adjustment of the large insured commercial banks is faster than that of non-financial companies. The results contribute to a slower average adjustment pace of a total capital ratio than the total risk-based capital and capital buffer ratios. The adjustment of capital is faster in the post-crisis period than during and before-crises era. The adequately capitalized banks adjust capital ratio faster than well-capitalized banks. In contrast, the under-capitalized banks adjust the total risk-based capital ratio and capital buffer ratio more quickly than that of others. The low liquid banks needed a higher time to restore equilibrium than high liquid banks. The results of this study have economic significance for policy implications and future regulations.

The study aims to investigate the effect of conventional capital ratio, risk-based capital ratio, and capital buffer ratio on commercial bank risk-taking over the period from 2002 to 2019 using a two-step GMM method. The finding reveals that there is a positive relationship between traditional capital ratio and risk-taking for the full sample results, which is supported by the regulatory hypothesis. The results are same across various categories based on capitalization and liquidity. Whereas the relationship is negative when capital is measured through risk-based capital ratio and capital buffer, the results are in line with the moral hazard hypothesis. The outcomes are consistent for all subcategories other than for well-capitalized and low liquid banks. The full sample findings are consistent when risk is proxied through loan loss provision. The impact of capital ratios on risk-taking in the pre-, pro- and post-crisis eras is heterogeneous and significant. The findings have significant insights for regulators to observe the differences among pre-, pro- and post-crisis periods for the well, adequately, under, significantly under-capitalized, high and low liquid insured commercial banks of the USA.

This study aims to explore how different capital ratios influence the risk-taking of large commercial banks of the USA. The study collects the data from FDIC for commercial banks from 2003 to 2019. We use a two-step GMM method to manage the endogeneity, simultaneity, heteroscedasticity, and auto-correlations issue. The findings conclude that an increase in the risk-based capital ratios decreases the banks' risks. Empirical findings demonstrated a significant and positive association between non-risk-based capital ratios and bank risk-taking. The findings also demonstrate that an increase in capital buffer ratios decreases the banks' risks. The impact of capital ratios on risk-taking is heterogeneous for well and under-capitalized banks. The findings suggest that State-chartered member and non-member banks are inclined to take a higher risk than nationally chartered banks. The findings have implications for regulators to consider the State-chartered member, non-member, and nationally chartered banks while formulating the new guidelines for required capital ratios.

This study examines the speed of adjustment of the leverage and regulatory capital ratios between 2002 and 2018 for large commercial banks of the USA. The study applies a two-step system GMM technique to obtain the speed of adjustment. The results prove that higher-quality capital requires greater time to restore equilibrium after an economic shock. The results also show that large commercial banks adjust their regulatory ratios faster than leverage ratios. Furthermore, the speed of adjustment is heterogeneous for cross-sections. The speed of adjustment for well-capitalized banks is higher than adequately and undercapitalized commercial banks. The speed of adjustment for highly liquid is higher than low liquid banks. This study also finds the banks quickly adjust their capital before the crisis period. The heterogeneous results have implications for regulators, policymakers, and bank managers for better decision making.

I analyse the effects of two macroprudential policy measures implemented in Switzerland: the activation of the countercyclical capital buffer (CCyB) and a cap on the loan-to-value (LTV) ratios. I use a difference-in-differences method to estimate the effects of these measures on risk indicators, such as their LTV and loan-to-income (LTI) ratios and mortgage growth rates. I find that both the CCyB and the LTV cap led to a reduction in high LTV mortgages. The banks affected by the CCyB also reduced their mortgage growth rates. I do not find any evidence that these measures had unintended consequences on LTI risks, other measures of mortgage lending standards, or non-mortgage credit growth.

Purpose This study aims to examine the effect of financial inclusion on bank stability, and the effect of bank stability on financial inclusion from 2011 to 2020. Design/methodology/approach This study analyses 33 countries which are divided into Asian countries, African countries, European countries and countries in the region of the Americas and using the panel regression method. Findings The analysis for the impact of financial inclusion on bank stability shows that high levels of financial inclusion have a significant positive impact on bank stability. The regional results show that financial inclusion improves bank stability in African countries and in countries in the region of the Americas while financial inclusion impairs bank stability in European countries. The analysis for the impact of bank stability on financial inclusion shows that bank stability has a significant effect on financial inclusion. The regional analysis shows that greater bank stability decreases financial inclusion in European and African countries while greater bank stability increases financial inclusion in countries in the Americas region. The results suggest that the effect of financial inclusion on bank stability, and the effect of bank stability on financial inclusion, depends on how financial inclusion and bank stability are measured and the region examined. Originality/value Existing studies have not examined the effect of financial inclusion on capital-based measures of bank stability and have not examined the effect of capital-based measures of bank stability on the level of financial inclusion.

Objectives This study determined the prospective relation between physical workload and long-term sickness absence (LTSA) and examined if work-unit social capital may buffer the effect of high physical workload on LTSA. Methods We included 28 925 participants from the Danish Well-being in HospitAL Employees (WHALE) cohort, and followed them for two years. Physical workload and social capital were self-reported and categorized into low, medium, and high. Physical workload was analyzed on the individual level, whereas social capital was analyzed on the work-unit level. LTSA data were obtained from the employers' payroll system. We performed two-level logistic regression analyses: joint-effect and stratified analyses adjusted for baseline covariates. Results High versus low physical workload was associated with a higher risk of LTSA [odds ratio (OR) 1.55, 95% confidence interval (CI) 1.40-1.72]. There was a multiplicative interaction (P=0.007) and a tendency of sub-additive interaction [relative excess risk due to interaction (RERI) -0.49, 95% CI -1.03-0.06] between physical workload and social capital. Doubly exposed employees had the highest risk of LTSA (OR 2.45; 95% CI 2.02-2.98), but this effect was smaller than expected from the sum of their main effects. Conclusions We found a prospective relation between physical workload and LTSA but no evidence of high social capital buffering the effect of high physical workload. High physical workload was a risk factor for LTSA at all levels of social capital and employees exposed to both exposures had the highest risk of LTSA. Interventions should aim at both improving social capital and reducing physical workload in order to efficiently prevent LTSA.

Orientation: The decision to have an optimum mix of capital structure is an issue of concern for financial service firms as much as other firms.Research purpose: The study investigated the impact of the Basel III regulatory requirements and other bank-specific factors on African banks’ capital structure and ascertained which of these factors ultimately determines the capital structure decision.Motivation for the study: There is limited evidence of study conducted on banks’ capital structure determinants within the Basel III Accord framework in Africa.Research approach/design and method: This study employed panel data drawn from 45 listed banks from 6 African nations. The panel data regression model was fitted with the system generalised moment methods estimator.Main findings: The findings revealed that within a similar economic condition in the sampled African nations, the Basel III minimum capital requirements, bank risk and size play the most important role in shaping the observed capital structure decisions of African banks.Practical/managerial implications: The regulators including central and reserve banks of the sampled African nation, and CEOs should keep their leverage ratio within the Basel III leverage ratio threshold to monitor and curb the build-up of excess leverage and also pay significant attention to the minimum capital requirements, bank risk and size in order to have an optimum capital mix.Contribution/value add: The Basel III Accord has significant importance in the financing decisions of African banks as much as the bank-specific factors.

The paper describes the mechanism of overlapping lever-age ratio requirement and macroprudential capital buffers and as-sociated implications for the resilience of the banking sector. It ex-amines to what extent capital buffers can be usable to absorb lossesin the case of the Czech banking sector and what impact this mayhave on the lending capacity of the real economy. The non-usabilityportion of capital buffers in the Czech banking sector amounts toCZK 27 billion (i.e. 24% of the combined capital buffer). The lend-ing potential of the capital buffer decreases by CZK 630 billion toCZK 1.6 trillion due to overlaps under otherwise equal conditions.The results indicate that the leverage ratio requirement may preventthe capital buffers from being fully effective and can reduce createdmacroprudential space.

Banking stability plays an important role as an intermediary in the economy. Both the economy and the banking sector affect each other. This study aims to investigate the effect and response of external variables and internal bank variables on Non-Performing Loans at Conventional Commercial Banks and Non-Performing Financing at Islamic Commercial Banks. This study uses macroeconomic variables such as economic growth and inflation, while a bank’s internal variables include the Loan to Deposit Ratio, Financing to Deposit Ratio, and Capital Buffer. This study employs Vector Autoregressive Regression (VAR) to examine the time series data. The results showed that the variable Economic Growth at lag-1, Loan to Deposit Ratio at lag-1, and Capital Buffer at lag-2 significantly affect Non-Performing Loans. While the variable that has a significant effect on Non-Performing Financing is only Economic Growth at lag-1. In addition, as can be seen from the Impulse Response Function curve, Non-Performing Financing tends to be more stable toward shocks from the variables used than Non-Performing Loans. The findings suggest that banks are encouraged to be more selective in loan disbursement and maintain minimal capital adequacy by taking into account the principle of prudence and referring to the bank’s health criteria.