A study of the correlation between capital adequacy ratio and banking financial performance

• Main Authors: Yi-Fan Pan, 潘一帆
• Other Authors: Jen-Hung Wang
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/48286367786670255861

碩士 === 世新大學 === 財務金融學研究所(含碩專班) === 104 === Under different period(total period, Basel II period, Basel II period excluding financial crisis period ) and models,the study uses OLS and White robust test to find the relationship between Total Capital Adequacy Ratio, Tier 1 Capital Adequacy Ratio, Non-Performing Loans Ratio, Coverage Ratio of Allowances for Bad Debt, SIZE, Asset to Liability Ratio, Liability to Equity Ratio and financial performing measures(Return on Asset Ratio, Return on Equity Ratio, Profit Margin Ratio, Earnings before Interest and Tax Ratio).Samples are collected from 34 banks located in Taiwan, covering from 2006 to 2014. The main result are as follows：Considering Total Capital Adequacy Ratio and Tier 1 Capital Adequacy Ratio, Total Capital Adequacy Ratio has significantly positive effect on Return on Asset Ratio and Return on Equity Ratio. The higher Total Capital Adequacy Ratio, the better financial performing measures. However, Tier 1 Capital Adequacy Ratio has significantly negative effect on Return on Asset Ratio and Return on Equity Ratio. The higher Total Capital Adequacy Ratio, the worse financial performing measures. Total Capital Adequacy Ratio and Tier 1 Capital Adequacy Ratio has adverse effect on financial performing measures. Coverage Ratio of Allowances for Bad Debt has insignificantly positive effect on financial performing measures. Non-Performing Loans Ratio has significantly negative effect on financial performing measures. SIZE has significantly positive effect on financial performing measures. Asset to Liability Ratio has insignificantly positive effect on financial performing measures. Liability to Equity Ratio has insignificantly negative effect on financial performing measures.