A study on the effects of capital adequacy ratios and specific credit policies on the intermediation activities of selected private domestic commercial banks in the Philippines for the period 1999-2004

Date of Publication

2006

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

Subject Categories

Finance and Financial Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Leonardo B. Araneta

Defense Panel Member



Rene G. Canlas
Jericho L. Castillo

Abstract/Summary

This study investigates the effects capital adequacy ratios and credit policies on intermediation activities of five (5) randomly selected private domestic commercial banks in the Philippines, which are Philippine Bank of Communications, East West Banking Corporation, Export and Industry Bank, International Exchange Bank and Philippine Trust Company. The timeframe of this study is from 1999 to 2004.

The researchers used descriptive and correlation research method in answering the hypotheses of this study. The computation of capital adequacy ratio was based on the framework set by Basel Accord. Single borrower's limit was based on the ceiling imposed by the Bangko Sentral ng Pilipinas. With regard to the 20% cap on loans to real estate sector, the researchers used a ratio that measures how much of the total loan portfolio of the bank is granted as loans to real estate sector. Risk ratios, namely loans-to-total assets ratio, deposits-to-total assets ratio and loans-to-deposits ratio, were utilized to quantify the intermediation activities of the bank.

Results obtained from the tests showed an insignificant relationship between capital adequacy ration and intermediation activities and credit policies and intermediation activities. Reasons for such may be: (1) the possible existence of a nonlinear relationship between the tested variables (2) not enough samples since the researchers carried out the tests with only 24 samples (3) the lack of consideration on the lag period after the reforms were initiated and (4) the banks' internal and external environments were not considered.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU13570

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

vi, 78, [25] leaves : ill. (some col.) 29 cm

Keywords

Banks and banking--Philippines; Philippine Bank of Communications; East West Banking Corporation; Export and Industry Bank; International exchange Bank; Philippine Trust Company

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