Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209825 
Year of Publication: 
2003
Series/Report no.: 
Working Paper No. 2003/11
Publisher: 
Norges Bank, Oslo
Abstract: 
Most banks hold a capital to asset ratio well above the required minimum defined by the present capital adequacy regulation (Basel I). Using bank-level panel data from Norway, important hypotheses concerning the determination of the buffer capital are analysed. Focus is on the importance of: (i) risk, particularly credit risk, (ii) the buffer as an insurance, (iii) the competition effect, (iv) supervisory discipline, and (v) economic growth. A negative or non-significant risk effect is found, which suggests that introducing a more risk-sensitive capital regulation (Basel II) is likely to affect Norwegian banks. Support is found for the hypothesis that buffer capital serves as an insurance against failure to meet the capital requirements.
Subjects: 
banking
excess capital
risk
panel data
JEL: 
C33
G21
G32
Persistent Identifier of the first edition: 
ISBN: 
82-7553-220-5
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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