The Impact of Charter Values on Bank Capital in Asia: A Threshold Regression Analysis

Recent theories suggest the relation between banks' charter values and capital buffers is nonlinear and a function of the value of the charter. Using novel threshold estimation techniques, we investigate this for a cross section of 239 commercial banks in 24 Asian economies during the 2008 cris...

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Bibliographic Details
Published inEmerging markets finance & trade Vol. 55; no. 3; pp. 655 - 670
Main Authors Daher, Hassan, Masih, Mansur, Ibrahim, Mansor
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 19.02.2019
Taylor & Francis Ltd
Subjects
bank regulation
bank risk
capital buffers
charter values
Charters
nonlinear relation
Asia
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Summary:Recent theories suggest the relation between banks' charter values and capital buffers is nonlinear and a function of the value of the charter. Using novel threshold estimation techniques, we investigate this for a cross section of 239 commercial banks in 24 Asian economies during the 2008 crisis and post crisis periods. For the latter period, a negative relation seems to dominate for high charter value banks in Asia (excluding Middle East region). During crises, our results for advanced Asian economies are consistent with capital buffer theory. Our findings raise distinct policy implications for the regulation and supervision of Asian banks.
ISSN:1540-496X
1558-0938
DOI:10.1080/1540496X.2018.1453803