SEÇİLMİŞ BOSNA BANKALARINDA SERMAYE YETERLİLİĞİ ORANININ BELİRLENMESİ

Nada Drace

Research Article

DETERMINANTS OF CAPITAL ADEQUACY RATIO IN SELECTED BOSNIAN BANKS

Year 2014, Special Issue of XIV. International Symposium on Econometrics, Operations Research and Statistics, 149 - 162, 01.10.2014

Nada Drace

Abstract

The analysis of a data set of observation for
10 banks in period of 6 years in B&H shows how Capital Adequacy Ratio (CAR)
is influenced by many factors such as: capital structure, size of the bank,
profitability indicators, participation of deposits and loans in total asset,
and leverage. Selected variables are
chosen on the previous research and analysis is done through several methods
and some diagnostics tests are performed in order to determine the most
appropriate model that explains determinants of CAR. Results indicate based on
data that SIZE, DEP, LOA, ROA, ROE AND LEV have significant effect on CAR. On
the other hand LLR and NIM do not appear to have significant effect on CAR.
Variables SIZE, DEP, LOA and ROA have negative effect on CAR, while variables
LLR, ROE, NIM and LEV are positively related with CAR. All variables except LOA
and ROA have expected signs. It is hard to distinguish which CAR is better
higher or lower, form stability aspect it is better to have higher CAR, but
from profitability side lower CAR is more preferable, so the banks should
decide based on this study which variable to use in order to reach targeted CAR
level.

Keywords

Capital Adequacy Ratio (CAR), Banks, Profitability, Panel Data, Econometric Modeling

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