Publication detail

Banks’ Capital Surplus and the Impact of Additional Capital Requirements

Author(s): PhDr. Simona Malovaná ,
Type: IES Working Papers
Year: 2017
Number: 28
Published in: IES Working Papers 28/2017
Publishing place: Prague
Keywords: Banks, capital requirements, capital surplus, panel data, partial adjustment model
JEL codes: G21, G28, G32
Suggested Citation: Malovana S. (2017). "Banks’ Capital Surplus and the Impact of Additional Capital Requirements” IES Working Paper 28/2017. IES FSV. Charles University.
Abstract: Banks in the Czech Republic maintain their regulatory capital ratios well above the level required by their regulator. This paper discusses the main reasons for this capital surplus and analyses the impact of additional capital requirements stemming from capital buffers and Pillar 2 add-ons on the capital ratios of banks holding such extra capital. The results provide evidence that banks shrink their capital surplus in response to higher capital requirements. A substantial portion of this adjustment seems to be delivered through changes in average risk weights. For this and other reasons, it is desirable to regularly assess whether the evolution and current level of risk weights give rise to any risk of underestimating the necessary level of capital.
Downloadable: wp_2017_28_malovana


McKinsey & Company
Moneta Money Bank