The Impact of Capital Adequacy Ratio on Bank Risk-Taking Behavior: Evidence from Local Commercial Banks in Sri Lanka
| dc.contributor.author | Thilakarathne, U.R.S. | |
| dc.contributor.author | Abeywardhana, D.K.Y. | |
| dc.date.accessioned | 2024-10-28T10:55:56Z | |
| dc.date.available | 2024-10-28T10:55:56Z | |
| dc.date.issued | 2023 | |
| dc.description.abstract | This study investigates the relationship between capital adequacy ratio (CAR) and default risk (DR) among local commercial banks in Sri Lanka. Utilizing a panel dataset spanning from 2012 to 2022, the study employs a random effects regression model to analyze the impact of CAR on DR, controlling for bank profitability (BP), bank size (BS), and bank interest rate (I). The findings reveal a complex relationship between CAR and DR, suggesting that a higher CAR may not always lead to a lower level of default risk. This counterintuitive finding challenges the conventional understanding of CAR as a standalone measure for mitigating risk. The study also identifies a positive and statistically significant relationship between BS and DR, emphasizing the need for enhanced risk management practices, particularly for larger banks. | en_US |
| dc.identifier.citation | Thilakarathne U.R.S.; Abeywardhana, D.K.Y. (2023), The Impact of Capital Adequacy Ratio on Bank Risk-Taking Behavior: Evidence from Local Commercial Banks in Sri Lanka, 9th International Conference Accounting Researchers & Educators (ICARE 2023), Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka. 115 | en_US |
| dc.identifier.uri | http://repository.kln.ac.lk/handle/123456789/28637 | |
| dc.publisher | Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka | en_US |
| dc.subject | Capital Adequacy Ratio, Default Risk, Bank Profitability, Bank Size, Bank Interest Rate, Random Effects Regression Model | en_US |
| dc.title | The Impact of Capital Adequacy Ratio on Bank Risk-Taking Behavior: Evidence from Local Commercial Banks in Sri Lanka | en_US |