Basel Ⅲ, capital stability, risk-taking, ownership: Evidence from Asia

摘要

This study investigates the associations among bank risk-taking, ownership concentration, and the recently proposed standard for capital stability (Basel Ⅲ). Consistent with theory, the evidence shows that a rise in ownership concentration by one standard deviation increases the extent of risk-taking by as much as 6-8%. Although Basel Ⅲ does not start taking effect until 2013, we hypo-thetically apply the capital stability standard on a sample of East Asian banks in the period 2005-2009. Our results suggest that an improvement in capital stability by one standard deviation diminishes the extent of risk-taking by 5.37% (as measured by the bank's Z-score). We also find that the standard for capital stability would have been more effective in countries with better economic development. Our results provide insights into the likely effects of Basel Ⅲ and should be useful to a wide range of audiences, including policymakers, regulators, bankers, as well as practitioners and researchers.