The impact of Basel Accord on bank investment in government securities: A case study of Pakistani commercial banks
Abstract/Description
In recent times, extensive analysis has been made on how financial regulations affect banking risk and their taking attitude. This study aims to analyse how financial regulation affects Pakistani commercial banks’ investment behaviour. The results conclude that financial regulation, especially targets for risk-based capital and long-term stable liquidity requirements, incentivises Pakistani commercial banks to invest in government securities. Banks with a higher leverage ratio invest less in government securities. Improved asset quality and market share enable banks to invest more in government assets. The findings also identified that macroeconomic factors such as fiscal deficit and interest rates play a significant role in banks’ investment in government securities.
Keywords
Bank Investment, Government Securities, Basel III, Capital Adequacy Ratio, Net stable Funding Ratio, Leverage Ratio
Track
Finance
Session Number/Theme
Session 1B: Finance
Session Chair
Dr. Sana Tauseef ; Dr. Mohsin Khawaja
Start Date/Time
26-5-2023 2:45 PM
End Date/Time
26-5-2023 4:45 PM
Location
MCS-4, Aman-CED, First Floor, Institute of Business Administration, Karachi
Recommended Citation
Anees, Z. (2023). The impact of Basel Accord on bank investment in government securities: A case study of Pakistani commercial banks. 3rd IBA SBS International Conference 2024. Retrieved from https://ir.iba.edu.pk/sbsic/2023/program/8
COinS
The impact of Basel Accord on bank investment in government securities: A case study of Pakistani commercial banks
MCS-4, Aman-CED, First Floor, Institute of Business Administration, Karachi
In recent times, extensive analysis has been made on how financial regulations affect banking risk and their taking attitude. This study aims to analyse how financial regulation affects Pakistani commercial banks’ investment behaviour. The results conclude that financial regulation, especially targets for risk-based capital and long-term stable liquidity requirements, incentivises Pakistani commercial banks to invest in government securities. Banks with a higher leverage ratio invest less in government securities. Improved asset quality and market share enable banks to invest more in government assets. The findings also identified that macroeconomic factors such as fiscal deficit and interest rates play a significant role in banks’ investment in government securities.
