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Banks’ Adjustment to Basel III Reform: A Bank-Level Perspective for Emerging Europe

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  • Michal Andrle
  • Josef C. Brada
  • Vladimír Tomšík
  • Jan Vlček

Abstract

The strategies of commercial banks are identified in response to higher capital requirements imposed by the Basel III reform. The focus will be on a sample of nine EU emerging market countries where the behavior of the five largest banks in each country will be examined. It was found that all banking sectors raised capital adequacy ratios by about 6.5 pp on average, mainly through retained earnings. Worries raised at the early stage of discussions about Basel III that commercial banks would shrink their balance sheet by reducing their lending to meet stricter capital requirements materialized only in banks struggling with profitability.

Suggested Citation

  • Michal Andrle & Josef C. Brada & Vladimír Tomšík & Jan Vlček, 2019. "Banks’ Adjustment to Basel III Reform: A Bank-Level Perspective for Emerging Europe," Eastern European Economics, Taylor & Francis Journals, vol. 57(1), pages 50-69, January.
    • Handle: RePEc:mes:eaeuec:v:57:y:2019:i:1:p:50-69
    DOI: 10.1080/00128775.2018.1483202
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    Cited by:

    1. Ambrocio, Gene & Jokivuolle, Esa, 2017. "Should bank capital requirements be less risk-sensitive because of credit constraints?," Bank of Finland Research Discussion Papers 10/2017, Bank of Finland.
    2. Festić Mejra & Črepinko Polona & Bratina Borut, 2020. "The Importance of Corporate Governance of Banks Concerning the Ownership in the International Environment," Naše gospodarstvo/Our economy, Sciendo, vol. 66(4), pages 11-27, December.

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