Bank Size, Risk-taking and Capital Regulation in Bangladesh

Authors

  • Mohammad M. RAHMAN Huazhong University of Science and Technology
  • Changjun ZHENG Huazhong University of Science and Technology
  • Badar N. ASHRAF Huazhong University of Science and Technology

Keywords:

Bank Size, Risk, Capital Regulation, Bank, Bangladesh

Abstract

This study examines the impact of bank size on bank regulatory capital ratios and risk-taking behavior using a panel dataset of 30 Bangladeshi commercial banks over the period 2008-2012. The relationship between bank regulatory capital ratios and bank risk-taking is also examined. For empirical analysis, generalized methods of moments (GMM) panel method are used to explore the relationships among bank size, regulatory capital ratios and risk-taking behavior. Empirical results show that large banks hold lower amount of capital and take higher level of risk. Findings also show a reverse relationship between bank capital levels and bank risk-taking; that is, banks holding higher levels of regulatory capital are significantly less risky. Findings of this study has important implications for the Bangladeshi government, policy makers, banking regulators and bank stakeholders regarding bank size, regulatory capital requirements and overall banking sector risk-taking behavior.

Published

31-05-2015

How to Cite

RAHMAN, M. M., ZHENG, C., & ASHRAF, B. N. (2015). Bank Size, Risk-taking and Capital Regulation in Bangladesh. Eurasian Journal of Business and Economics, 8(15), 95-114. Retrieved from https://www.ejbe.org/index.php/EJBE/article/view/144

Issue

Section

Articles