Risk-Taking Behavior and Capital Adequacy in a Mixed Banking System: New Evidence from Malaysia Using Dynamic OLS and Two-Step Dynamic System GMM Estimators

Hishamuddin Abdul Wahab · Buerhan Saiti · Saiful Azhar Rosly · Mansur Masih

37 citations0/0 files storedEmerging Markets Finance and Trade

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Banking stability, regulation, efficiency Islamic Finance and Banking Studies Banking Sector Performance and Management

Abstract

This study is the first attempt to investigate the relationship between the level of risky assets and capital level in a mixed Malaysian banking system covering 83 months starting December 2006. The results of dynamic ordinary least squares indicate positive relationship between capital ratio (CAR) and risk-weighted asset ratio (RWA) in the long run. Furthermore, the causality analysis based on panel vector error correction model (VECM) and two-step dynamic system generalized method of moments indicates unidirectional causality from CAR to RWA. Our results further suggest that higher capital growth and capital buffer provide an extra cushion for the Malaysian banks to pursue relatively riskier financial activities, and the nature of risk-taking behavior of Islamic banks follows that of the conventional banks.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 37 citations exist upstream.

References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1987Co-Integration and Error Correction: Representation, Estimation, and Testing 1998Initial conditions and moment restrictions in dynamic panel data models 1995Another look at the instrumental variable estimation of error-components models 1995Initial conditions and moment restrictions in dynamic panel data models 1999Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors 2004A finite sample correction for the variance of linear efficient two-step GMM estimators 1999Spurious regression and residual-based tests for cointegration in panel data

Cited by

2020Does capital adequacy ratio influence risk-taking behaviour of conventional and Islamic banks differently? Empirical evidence from dual banking system of Malaysia 2020Profit- and loss-sharing impact on Islamic bank liquidity in GCC countries 2020Does information disclosure reduce stock price volatility? A comparison of Islamic and conventional banks in Gulf countries 2017Capital structure of Islamic banks: a critical review of theoretical and empirical research

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.