Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174221
Authors: 
Malovaná, Simona
Year of Publication: 
2017
Series/Report no.: 
IES Working Paper 28/2017
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.
Subjects: 
Banks
capital requirements
capital surplus
panel data
partialadjustment model
JEL: 
G21
G28
G32
Document Type: 
Working Paper

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