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The authors examine whether Chinese banks use loan loss provisions (LLPs) for capital management, income smoothing and signaling purposes, and assess the effect of the recent regulatory changes following the implementation of Chinese Basel III on such behavior.

The authors use a unique set of hand-collected data on bank capital combined with financial data downloaded from the China Stock Market and Accounting Research (CSMAR) database. Multivariate regression models are used to test our hypotheses.

The authors find that while there is no evidence to suggest capital management practice before the Chinese Basel III, the implementation of the new regulations induced listed banks to manage tier-1 capital via LLPs. The authors also find strong support that Chinese banks engage in income smoothing via LLPs management, and there is no change in such tendency following the issuance of Chinese Basel III. Lastly, the authors do not find support for the signaling behavior by Chinese banks using LLPs.

The authors’ evidence suggests that elevated tier-1 capital and provisioning requirements may induce capital management by banks, which indicates a potential unintended effect brought forth by the new Basel regulations.

To the best of authors’ knowledge, this study is the first to examine Chinese banks' behavior relating to LLPs in terms of capital management, income smoothing and signaling. In particular, the authors use a sample containing a large number of Chinese commercial banks – previously a major data issue in other studies.

This paper aims to examine the effects of Tier-1 capital toward risk management and profitability on the performance of Indonesian Commercial Banks.

The research population consisted of all commercial banks listed on the Indonesia Stock Exchange. The data were in the form of financial statements of commercial banks for the periods of 2012 to 2016 with a total of 42 companies (bank). From a total of 42 commercial banks listed in the Indonesia Stock Exchange, not all of them met the criteria. Commercial banks that meet these criteria are as many as 28 banks are sampled research.

Tier-1 capital has a positive direct effect on risk management, Tier-1 capital has a positive indirect effect on profitability with risk management as a mediation variable, risk management has a positive direct effect on profitability, Tier-1 capital has a positive indirect effect on performance with risk management and profitability as mediation variables, risk management has a positive indirect effect on performance with as mediation variable and profitability has a positive impact on performance.

The originality of this research can be seen from the causal relationship between the effects of Tier-1 capital, risk management and profitability on the performance of commercial banks in the context of stock performance among Indonesia commercial banks. Also, the analysis tools using multiple fixed effect panel data models in this research as a novelty in this research. In addition, previous research findings remain inconsistent with one another. By conducting this research, it is expected that more consistent research findings than the previous ones can be generated. Sluggish global economic conditions, which result in declined bank performance are an interesting topic to investigate. The paper uses an original sample, 28 Indonesian banks in 2012-2016. Also, it links Tier 1 capital with risk management and performance in a novel theoretical framework.

This study aims to understand how quickly Japanese banks readjust their capital ratios (leverage, regulatory capital, tier-I capital and common equity) following an economic shock.

This study uses a two-step system GMM framework to test the study's hypotheses using the annual data of Japanese commercial and cooperative banks ranging from 2005 to 2020.

The findings show that banks adjust their leverage ratio faster than regulatory capital, tier-I capital and common equity ratios. In addition to that, the results reveal that the speed of capital adjustment is higher for commercial banks than for cooperative banks, suggesting higher economic costs and implications for commercial banks. Furthermore, it is worth noting that well-capitalised (under-capitalised) banks tend to prioritise the adjustments to common equity (leverage) before considering the adjustments to leverage (common equity). According to the results, high-liquid (low-liquid) banks alter their regulatory capital and tier-I capital ratios (leverage) more quickly (more slowly) than low-liquid (high-liquid) banks.

The findings suggest that when formulating and implementing new banking regulations, particularly in assessing and adjusting specific capital requirements under Pillar II of Basel III, management (including bankers, regulators and policymakers) should consider the heterogeneity observed in the rate of capital adjustment across various bank characteristics. Additionally, bank managers should also consider the speed of adjustment when determining optimal half-life and target capital structures.

To the author's knowledge, this study represents a pioneering investigation into the rate of adjustment of capital ratios (leverage, regulatory, tier-I and common equity) within Japan's banking sector. The study employs a comprehensive dataset encompassing both commercial and cooperative banks to facilitate this analysis. A notable contribution to the existing body of literature, this study offers a detailed analysis and emphasises the varying degrees of adjustment in capital ratios. The study also highlights the heterogeneous nature of the adjustment rate in these ratios by categorising the data into well-capitalised, under-capitalised, highly liquid and low-liquid banks.

This research aims to examine the effect of Tier-1 capital, risk management, and profitability on performance of Indonesia commercial banks.

The research population consisted of all commercial banks listed in the Indonesia Stock Exchange periods of 2010 to 2014 with a total of 42 companies. The statistical analysis for testing the hypothesis using structural equation modeling (SEM) covariance based using WarpPLS.

Research result shows that Tier-1 capital has a positive effect on capital on risk management; risk management has a positive effect on performance, but risk management does not have an effect to profitability; profitability has a positive effect on performance; and Tier-1 capital has a negative effect on profitability. On the other hand, profitability has a negative effect on Tier-1 capital and performance has a positive effect on Tier-1 capital, whereas Tier-1 capital does not have an effect on performance.

The originality of this research can be seen from the causal relationship between the effects of Tier-1 capital, risk management and profitability on performance of commercial banks in the context of stock performance among Indonesia commercial banks. In addition, previous research findings remain inconsistent between one another. By conducting this research, it is expected that more consistent research findings than the previous ones can be generated. Sluggish global economic conditions which result in declined bank performance are an interesting topic to investigate.

Reports that, unlike Western commercial banks, Islamic banks are prohibited by Islamic precepts to receive or pay interest, inter alia, in all their transactions. Argues that the Basle capital adequacy ratio (CAR), which was implemented in 1992 by regulatory authorities in many countries, is irrelevant to Islamic banks because it does not accommodate, among other things, one of the major instruments ‐ investment accounts ‐ through which Islamic banks mobilize funds on the basis of profit sharing. Develops four possible scenarios for the treatment of these accounts in the calculation of CAR and examines their impact on the financial and marketing strategies of Islamic banks in the light of the risk‐return relationship between the funds contributors of these banks.

This empirical study, from the international retailing perspective, examines the direction of retailers' further expansion after initial entry into overseas host market in the context of the luxury fashion retail market in China.

The research adopts qualitative multiple case studies.

After initial entry into China, luxury fashion retailers further expand their retail operations through three directional patterns: cautious, regional and countrywide expansions. The stepwise expansion from tier-1 to tier-2 and tier-3 cities remains popular; however, the importance of the tier system of Chinese cities has been weakened because tier-3 cities in affluent regions are perceived to have more potential than some tier-2 cities in less developed regions. The retailers assess a potential local market through interrelated criteria, including location and strategic importance, economic development, available store locations and staff, a high degree of urbanisation and tourism, debatable favourable policies and offers, and popularity of e- and m-commerce. There is a positive relationship between popularity of e- and m-commerce in a city and the potential of that city to run brick-and-mortar stores.

The paper offers an insight into the current international retailing literature by examining the direction of luxury fashion retailers' further expansion after their initial market entry. Particularly, the research considers a set of criteria which can be used to assess a potential local market, and the impact of e- and m-commerce on local market choices for brick-and-mortar stores.

In September 2009, G20 representatives called for introducing a minimum leverage ratio as an instrument of financial regulation. It is supposed to assure a certain degree of core capital for banks, independent of the controversial procedures used to assess risk. The paper aims to discuss these issues.

This paper discusses the interaction and tensions between the leverage ratio and risk-based capital requirements, using financial data of the Swiss systemically important bank United Bank of Switzerland.

It can be shown that the leverage ratio potentially undermines risk weighting such that banks feel encouraged to take greater risks.

The paper proposes an alternative instrument that is conceived as a base risk weight and functions as a backstop. It ensures a minimum core capital ratio, based on unweighted total exposure by ensuring a minimum ratio of risk-weighted to total assets for all banks. The proposed measure is easy to compute like the leverage ratio, and also like the latter, it is independent of risk weighting. Yet, its primary advantage is that it does not supersede risk-based capital adequacy targets, but rather supplements them.

The purpose of this paper is to investigate the impact of basel accord on the Bangladeshi bank performance including Islamic banks and the role of subordinated debt (sub-debt) as basel regulatory capital (BRC).

The authors conducted the empirical investigation by adopting a quantitative approach and using the secondary data available in the annual reports of the sample banks between 2009 and 2018. This paper develops an econometric model to compare and analyze the regression result under two states of capital-to-risk adjusted assets ratio (CRAR) with sub-debt and CRAR without sub-debt. This paper analyzes the impact of sub-debt in the largest Islamic bank for the year 2007 as a case study for endorsing the findings.

This paper finds that CRAR has positive alignments with return on equity (ROE) and cash dividend when sub-debt is considered as Tier 2 capital. This paper observes that the huge bad loan write-off supports to downsize the asset size thus temporarily enhance the return on assets (ROA). In a nutshell, sub-debt gives banks an ill incentive to disburse steady cash dividends instead of injecting genuine equity capital, encouraging them to take more credit risk. In fact, more private commercial banks (PCBs) issued huge sub-debts between 2009 and 2018 under a unique arrangement, which the authors termed as the “sub-debt trap.”

This paper draws policy implications for the banking regulator to identify and rectify a systemic problem of the “sub-debt trap” which hinders the regulatory purpose from the implementation of basel accord II and III. A limitation of this study is the authors shed analytical light on Bangladeshi banks, i.e. it a single country analysis which may not be generalized to other developing countries except matching with a similar context.

The paper contributes to accumulating empirical studies on the effectiveness of basel accord implementation in developing countries. In most of the developing countries, where institutional loopholes are a major concern, the research provides evidence that how weak institutional settings are largely responsible for harvesting the potential benefit from micro-prudential regulation such as the basel accord. To shed analytical light on developing country context, the study document that sub-debt has been instrumentalized to maintain minimum capital ratio and banks managers tends more focus on improving ROE instead of ROA. The findings of the study are supportive to other developing countries where sub-debt considered as BRC and issued through private placement. To the best of the authors’ knowledge, it is the first attempt to cast doubt on the impact of sub-debt as a BRC, given the uniqueness of the Bangladeshi banking industry, on the PCBs including Islamic banks.

This study aims to empirically investigate whether the adoption of fair‐value‐accounting decreases the relevance of banks' capital adequacy ratios (CARs) in explaining insolvency risks. Additionally, how the disclosure quality affects the superiority of fair‐value‐based CARs over cost‐based CARs is also explored.

Using data from Taiwan banks from 2004 to 2010, the following tests are conducted. First, the insolvency risk is regressed on the reported CAR, along with the related interaction with the adoption of TFAS No. 34 to test the weakened relevance of CARs during the post‐TFAS No. 34 periods. Second, the relative relevance of fair‐value‐based CARs and cost‐based CARs is assessed using Vuong's Z‐statistic. Lastly, observations are partitioned into two groups – banks of higher and lower disclosure quality – to investigate whether fair‐value‐based CARs is superior (inferior) to cost‐based CARs for banks with higher (lower) disclosure quality.

First, adopting TFAS No. 34 reduces the relevance of CARs in explaining banks' insolvency risks. Second, fair‐value‐based CARs are superior to cost‐based ones in relation to insolvency risks only for banks of higher disclosure quality.

This study is the first to fill the empirical gap by demonstrating that the ability of CARs to explain the insolvency risk is adversely influenced by the adoption of fair value accounting. In particular, the results shed some light on the move toward fair‐value accounting, and may be interpreted that adopting fair‐value reporting is not flawless, drawing attention to the potential information loss in abandoning historical‐cost‐based regimes. Moreover, because the application of fair‐value accounting in the Taiwan banking industry is fairly similar to that of international or US GAAP, these results also yield insights into other standard‐setters.

The purpose of this study is to replicate Avery and Berger’s (1991) analysis using data from 2001 through 2011. Although risk-based capital (RBC) regulation is a key component of US banking regulation, empirical evidence of the effectiveness of these regulations has been mixed. Among the first studies of RBC regulation, Avery and Berger (1991) provide evidence from data on US banks that new RBC regulations outperformed old capital regulations from 1982 through 1989.

Using data from the Federal Reserve’s Call Reports, the authors compare banks’ capital ratios and RBC ratios to five measures of bank performance: income, standard deviation of income, non-performing loans, loan charge-offs and probability of failure.

Consistent with Avery and Berger (1991), the authors find banks’ risk-weighted assets to be significant predictors of their future performance and that RBC ratios outperform regular capital ratios as predictors of risk.

The study improves on Avery and Berger (1991) by using an updated data set from 2001 through 2011. The authors also discuss some potential limitations of this method of analysis.