An empirical study about the capital requirements and banks' behavior of selected commercial banks in the Philippines from 2007-2013

Date of Publication

2012

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Commerce Major 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

Alfredo M. Santoyo

Defense Panel Chair

Edralin C. Lim

Defense Panel Member

James Chan
Mar Andriel Umali

Abstract/Summary

The study examines the association between the capital regulations and bank's behavior of selected commercial banks in the Philippines. The period covered in this study was from 2007-2013. Also, it wants to answer the following problems: (1) What are the effects of the BSP's regulations on capital requirements on the following? (2) How do commercial banks respond to BSP's regulation which affects their capital adequacy? Both questions are in terms of capitalization and risk-taking.

Regression analysis was used to analyze the data, specifically the method of three-stage-least-squares. The model used in the study was developed by Shrieves and Dahl (1992) and further specified by Rime (2000). Two variables were used in defining the capital, which is the ratio of capital to total assets (RCTA) and ratio of capital to risk-weighted assets (RCWA). On the other hand, risk was defined using the risk-weighted assets to total assets (RWA).

The results showed that for RCTA, only the variables return on assets and change in risk has a positive and significant effect on capitalization. While for risk, size has a negative and significant effect, and change in capital has a positive and signifcant effect. Moreover, for RCWA, the results showed that for capitalization only return on assets has a positive and significant effect same for RCTA. On the other hand, the variables that are significant for risk are loan losses, which have a negative impact and risk-weighted assets from the previous year which has a positive impact.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU21630

Shelf Location

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

Physical Description

77, [3] leaves : illustrations (some color)

Keywords

Banks and banking--Philippines

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