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The impact of liquidity and capital requirements on lending and stability of African banks
Univ Rwanda, Rwanda.
German Inst Econ Res DIW Berlin, Germany;Jönköping University, Sweden;CERBE, Italy.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics. Jönköping University, Sweden.
2020 (English)In: Journal of international financial markets, institutions, and money, ISSN 1042-4431, E-ISSN 1873-0612, Vol. 67, p. 1-20, article id 101201Article in journal (Refereed) Published
Abstract [en]

We assess whether compliance with Basel III's main requirements, the Net Stable Funding Ratio (NSFR) and the risk-weighted Total Capital Ratio (TCR), matters for lending and stability of African banks. Banks with an NSFR or a TCR of at least the required minimum are defined as treatment group in the endogenous treatment estimations. Our results reveal that African banks complying with the capital threshold TCR lend more than banks from the less capitalized control group, while banks complying with the NSFR threshold lend less than their peers. A detailed analysis with sample splits reveals that complying with the capital threshold improves the Z-score and the ratio of non-performing loans (NPL ratio) only for those banks with stability levels above the median. The likelihood of African banks to comply with the Basel III thresholds is overall strongly dependent on the strengths of regulatory institutions in the home country and, in case of the capital ratio, also on the legal origin. (C) 2020 Elsevier B.V. All rights reserved.

Place, publisher, year, edition, pages
Elsevier, 2020. Vol. 67, p. 1-20, article id 101201
Keywords [en]
Basel III, Net stable funding ratio, Risk-weighted capital ratio, Lending, Bank stability, Non performing loans
National Category
Economics and Business
Research subject
Economy
Identifiers
URN: urn:nbn:se:lnu:diva-97722DOI: 10.1016/j.intfin.2020.101201ISI: 000550780400002Scopus ID: 2-s2.0-85086585181OAI: oai:DiVA.org:lnu-97722DiVA, id: diva2:1461783
Available from: 2020-08-27 Created: 2020-08-27 Last updated: 2021-11-26Bibliographically approved

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Stephan, Andreas

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CiteExportLink to record
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Citation style
  • apa
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  • vancouver
  • Other style
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Language
  • de-DE
  • en-GB
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  • nn-NO
  • nn-NB
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Output format
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