Banks’ Adjustment to Basel III Reform : A Bank-Level Perspective for Emerging Europe

Author/Editor:

Michal Andrle ; Vladimír Tomšík ; Jan Vlcek

Publication Date:

February 10, 2017

Electronic Access:

Free Full Text (PDF file size is 1077 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

The paper seeks to identify strategies of commercial banks in response to higher capital requirements of Basel III reform and its phase-in. It focuses on a sample of nine EU emerging market countries and picks up 5 largest banks in each country assessing their response. The paper finds that all banking sectors raised CAR ratios mainly through retained earnings. In countries where the banking sector struggled with profitability, banks have resorted to issuance of new equity or shrunk the size of their balance sheets to meet the higher capital-adequacy requirements. Worries echoed at the early stage of Basel III compilation, namely that commercial banks would shrink their balance sheet by reducing their lending to meet stricter capital requirements, did materialize only in banks struggling with profitability.

Series:

Working Paper No. 17/24

Subject:

English

Publication Date:

February 10, 2017

ISBN/ISSN:

9781475577525/1018-5941

Stock No:

WPIEA2017024

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

23

Please address any questions about this title to publications@imf.org