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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Do Basel III higher common equity capital requirements matter for bank risk-taking behaviour? Lessons from South Africa
Authors:Adesina, Kolade Sunday
Mwamba, John Muteba
Year:2016
Periodical:African Development Review (ISSN 1467-8268)
Volume:28
Issue:3
Pages:319-331
Language:English
Geographic term:South Africa
Subjects:banks
risk
fiscal policy
economic models
Link:https://doi.org/10.1111/1467-8268.12208
Abstract:This paper examines the role of common equity capital in determining the risk-taking behaviour of banks in South Africa. Using system GMM, the results show that higher common equity capital is associated with lower bank risk. Additionally, the results show that there is a negative and significant relationship between business cycles and bank risk, while the relationship between bank market power and risk is positive and significant. The findings remain robust after using alternative measures of bank risk. On the whole, this study recommends that an increase in common equity capital should be coupled with control of bank market power to achieve the goal of curtailing excessive risk appetite of banks. Bibliogr., notes, ref., sum. [Journal abstract]
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