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Impact of Business Cycle on Bank Capital Buffers: Evidence From India.
JITENDRA MAHAKUD,
Published in
2013
Volume: 8
   
Issue: 2
Pages: 110 - 127
Abstract
This paper investigates the impact of the business cycle, adjustment costs and other bank specific variables on bank capital buffer in the three types of Indian commercial banks. This study specifies a partial adjustment model and uses the dynamic panel data model and more specifically the Generalized Method of Moments Technique to examine the impact of the business cycle, adjustment costs and other bank specific variables for the determination of bank capital buffer. We find a robustly significant negative relationship between the business cycle and capital buffer for all the three types of commercial banks in India. The capital buffers of foreign banks react more strongly to the business cycle than the other banks. Adjustment costs have the greater impact on the bank capital buffer. [ABSTRACT FROM AUTHOR]
About the journal
JournalEconomics, Management & Financial Markets
ISSN18423191
Open AccessFalse