King’s Model on Capitalization under Basel III: The Case of Lebanese Banks
Objective: Lebanese banks have shown immunity towards the 2008 financial crisis that was attributed to many factors including a strong regulatory and supervisory system of conservative practices and structural economic factors such as the recurrence and non-speculative nature of capital inflows towa...
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| Format: | Article |
| Language: | English |
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CSRC Publishing
2018-06-01
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| Series: | Journal of Accounting and Finance in Emerging Economies |
| Subjects: | |
| Online Access: | https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/347 |
| _version_ | 1819123399527497728 |
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| author | Nabil Georges Badr Somaya Nasif El Ahmadieh |
| author_facet | Nabil Georges Badr Somaya Nasif El Ahmadieh |
| author_sort | Nabil Georges Badr |
| collection | DOAJ |
| description | Objective: Lebanese banks have shown immunity towards the 2008 financial crisis that was attributed to many factors including a strong regulatory and supervisory system of conservative practices and structural economic factors such as the recurrence and non-speculative nature of capital inflows towards Lebanon supported by a large pool of offshore savings from diaspora and investors around the globe. The purpose of this study is to investigate the relation between capital adequacy ratios (CARs) and lending spread ratio (LSR). This paper presents the first assessment of the Basel III capital requirements on lending spread ratio before, during and after the financial crisis among commercial banks operated in Lebanon.
Methodology: We consider King’s approach and assess his model’s applicability in the Lebanese context. Findings indicate some deviations, specifically related to the practices and financial performance of commercial banks in Lebanon.
Results: We found no indication of impact of the change in CAR on LSR among Lebanese commercial banks in years prior to the recent financial crises; Nevertheless, the impact of changing CAR by 1 pp on LSR has a modest effect on Lebanese commercial banks during the years of financial crises; this effect is lowered to become modest after the crisis.
Implication: The results of the current study reveal significant implications for managers in commercial banks in particular and all banks in general. Given that Lebanese commercial banks are well-capitalized and their Capital Adequacy Ratios are above international benchmarks, bank managers must carefully monitor the cost of the implementation of Basel III requirements |
| first_indexed | 2024-12-22T07:07:44Z |
| format | Article |
| id | doaj.art-5f4e256c3ccb406785022191e5b938f9 |
| institution | Directory Open Access Journal |
| issn | 2519-0318 2518-8488 |
| language | English |
| last_indexed | 2024-12-22T07:07:44Z |
| publishDate | 2018-06-01 |
| publisher | CSRC Publishing |
| record_format | Article |
| series | Journal of Accounting and Finance in Emerging Economies |
| spelling | doaj.art-5f4e256c3ccb406785022191e5b938f92022-12-21T18:34:37ZengCSRC PublishingJournal of Accounting and Finance in Emerging Economies2519-03182518-84882018-06-014110.26710/jafee.v4i1.347King’s Model on Capitalization under Basel III: The Case of Lebanese BanksNabil Georges Badr0Somaya Nasif El Ahmadieh1Faculty of Business Administration, GGSB, FranceFaculty of Business Administration, GGSB, FranceObjective: Lebanese banks have shown immunity towards the 2008 financial crisis that was attributed to many factors including a strong regulatory and supervisory system of conservative practices and structural economic factors such as the recurrence and non-speculative nature of capital inflows towards Lebanon supported by a large pool of offshore savings from diaspora and investors around the globe. The purpose of this study is to investigate the relation between capital adequacy ratios (CARs) and lending spread ratio (LSR). This paper presents the first assessment of the Basel III capital requirements on lending spread ratio before, during and after the financial crisis among commercial banks operated in Lebanon. Methodology: We consider King’s approach and assess his model’s applicability in the Lebanese context. Findings indicate some deviations, specifically related to the practices and financial performance of commercial banks in Lebanon. Results: We found no indication of impact of the change in CAR on LSR among Lebanese commercial banks in years prior to the recent financial crises; Nevertheless, the impact of changing CAR by 1 pp on LSR has a modest effect on Lebanese commercial banks during the years of financial crises; this effect is lowered to become modest after the crisis. Implication: The results of the current study reveal significant implications for managers in commercial banks in particular and all banks in general. Given that Lebanese commercial banks are well-capitalized and their Capital Adequacy Ratios are above international benchmarks, bank managers must carefully monitor the cost of the implementation of Basel III requirementshttps://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/347Capital adequacy ratiosLending spread ratiofinancial crisiscommercial banks in Lebanon |
| spellingShingle | Nabil Georges Badr Somaya Nasif El Ahmadieh King’s Model on Capitalization under Basel III: The Case of Lebanese Banks Journal of Accounting and Finance in Emerging Economies Capital adequacy ratios Lending spread ratio financial crisis commercial banks in Lebanon |
| title | King’s Model on Capitalization under Basel III: The Case of Lebanese Banks |
| title_full | King’s Model on Capitalization under Basel III: The Case of Lebanese Banks |
| title_fullStr | King’s Model on Capitalization under Basel III: The Case of Lebanese Banks |
| title_full_unstemmed | King’s Model on Capitalization under Basel III: The Case of Lebanese Banks |
| title_short | King’s Model on Capitalization under Basel III: The Case of Lebanese Banks |
| title_sort | king s model on capitalization under basel iii the case of lebanese banks |
| topic | Capital adequacy ratios Lending spread ratio financial crisis commercial banks in Lebanon |
| url | https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/347 |
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