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<p>This research examines the potential impact of Basel IV capital requirements (CAR) on bank lending ability in Africa. To achieve the objective, the study simulated Basel IV capital ratio using historical data to create sample representative banks as if the selected banks had implemented Basel IV CAR for the period 2000 and 2018 and used actual data for existing Basel II and III CAR. Dynamic panel regression analyses, namely the System GMM and P-ARDL, were utilised. First, our results suggest that higher Basel CAR, particularly the new Basel IV, portends short-term negative impacts on bank lending while the long-term impact on bank lending is favorable. Second, the weight of non-performing loans tends to decline as banks transitioned from lower to higher Basel CAR. Lastly, this study shows that complying with Basel IV CAR will help African banks to achieve financial deepening and increase bank lending ability.</p>
</abstract>

This research examines the potential impact of Basel IV capital requirements (CAR) on bank lending ability in Africa. To achieve the objective, the study simulated Basel IV capital ratio using historical data to create sample representative banks as if the selected banks had implemented Basel IV CAR for the period 2000 and 2018 and used actual data for existing Basel II and III CAR. Dynamic panel regression analyses, namely the System GMM and P-ARDL, were utilised. First, our results suggest that higher Basel CAR, particularly the new Basel IV, portends short-term negative impacts on bank lending while the long-term impact on bank lending is favorable. Second, the weight of non-performing loans tends to decline as banks transitioned from lower to higher Basel CAR. Lastly, this study shows that complying with Basel IV CAR will help African banks to achieve financial deepening and increase bank lending ability.

Changes in Basel Capital Requirements and Lending Ability of African Commercial Banks

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

This research examines the potential impact of Basel IV capital requirements (CAR) on bank lending ability in Africa. To achieve the objective, the study...

Changes in Basel Capital Requirements and Lending Ability of African Commercial Banks

Data publikacji: 23 wrz 2022

Zakres stron: 179 - 201

Otrzymano: 07 mar 2021

Przyjęty: 14 cze 2021

DOI: https://doi.org/10.2478/jcbtp-2022-0029

Słowa kluczowe
African Banks, Bank lending, Basel capital requirements, risk assessment

© 2022 Damilola Oyetade et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Changes in Basel Capital Requirements and Lending Ability of African Commercial Banks

Data publikacji: 23 wrz 2022

Zakres stron: 179 - 201

Otrzymano: 07 mar 2021

Przyjęty: 14 cze 2021

DOI: https://doi.org/10.2478/jcbtp-2022-0029

Słowa kluczoweAfrican Banks, Bank lending, Basel capital requirements, risk assessment

© 2022 Damilola Oyetade et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Słowa kluczowe
African Banks, Bank lending, Basel capital requirements, risk assessment