Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators
This study is the first attempt to investigate the relationship between the level of risky assets and capital level in a mixed Malaysian banking system covering 83 months starting December 2006. The results of dynamic ordinary least squares indicate positive relationship between capital ratio (CAR...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English English English |
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Taylor & Francis
2017
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| Online Access: | http://irep.iium.edu.my/51522/ http://irep.iium.edu.my/51522/1/51522-Risk-taking%20behavior%20and%20capital.pdf http://irep.iium.edu.my/51522/13/51522_Risk-taking%20behavior%20and%20capital%20adequacy_WOS.pdf http://irep.iium.edu.my/51522/14/51522_Risk-taking%20behavior%20and%20capital%20adequacy_SCOPUS.pdf |
| _version_ | 1848783870011375616 |
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| author | Abdul Wahab, Hishamuddin Saiti, Buerhan Rosly, Saiful Azhar Mohammed Masih, Abul Mansur |
| author_facet | Abdul Wahab, Hishamuddin Saiti, Buerhan Rosly, Saiful Azhar Mohammed Masih, Abul Mansur |
| author_sort | Abdul Wahab, Hishamuddin |
| building | IIUM Repository |
| collection | Online Access |
| description | This study is the first attempt to investigate the relationship between the level of risky assets
and capital level in a mixed Malaysian banking system covering 83 months starting December 2006. The
results of dynamic ordinary least squares indicate positive relationship between capital ratio (CAR) and
risk-weighted asset ratio (RWA) in the long run. Furthermore, the causality analysis based on panel VECM 15
and two-step dynamic system generalized method of moments indicates unidirectional causality from CAR
to RWA. Our results further suggest that higher capital growth and capital buffer provide an extra cushion
for the Malaysian banks to pursue relatively riskier financial activities, and the nature of risk-taking
behavior of Islamic banks follows that of the conventional banks. |
| first_indexed | 2025-11-14T16:28:13Z |
| format | Article |
| id | iium-51522 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English English English |
| last_indexed | 2025-11-14T16:28:13Z |
| publishDate | 2017 |
| publisher | Taylor & Francis |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-515222016-12-22T02:46:53Z http://irep.iium.edu.my/51522/ Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators Abdul Wahab, Hishamuddin Saiti, Buerhan Rosly, Saiful Azhar Mohammed Masih, Abul Mansur HG1501 Banking This study is the first attempt to investigate the relationship between the level of risky assets and capital level in a mixed Malaysian banking system covering 83 months starting December 2006. The results of dynamic ordinary least squares indicate positive relationship between capital ratio (CAR) and risk-weighted asset ratio (RWA) in the long run. Furthermore, the causality analysis based on panel VECM 15 and two-step dynamic system generalized method of moments indicates unidirectional causality from CAR to RWA. Our results further suggest that higher capital growth and capital buffer provide an extra cushion for the Malaysian banks to pursue relatively riskier financial activities, and the nature of risk-taking behavior of Islamic banks follows that of the conventional banks. Taylor & Francis 2017 Article PeerReviewed application/pdf en http://irep.iium.edu.my/51522/1/51522-Risk-taking%20behavior%20and%20capital.pdf application/pdf en http://irep.iium.edu.my/51522/13/51522_Risk-taking%20behavior%20and%20capital%20adequacy_WOS.pdf application/pdf en http://irep.iium.edu.my/51522/14/51522_Risk-taking%20behavior%20and%20capital%20adequacy_SCOPUS.pdf Abdul Wahab, Hishamuddin and Saiti, Buerhan and Rosly, Saiful Azhar and Mohammed Masih, Abul Mansur (2017) Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators. Emerging Markets Finance and Trade, 53 (1). pp. 180-198. ISSN 1540-496X E-ISSN 1558-0938 http://www.tandfonline.com/eprint/NvksIWkINcqWqDP6PeEg/full 10.1080/1540496X.2016.1162151 |
| spellingShingle | HG1501 Banking Abdul Wahab, Hishamuddin Saiti, Buerhan Rosly, Saiful Azhar Mohammed Masih, Abul Mansur Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators |
| title | Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators |
| title_full | Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators |
| title_fullStr | Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators |
| title_full_unstemmed | Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators |
| title_short | Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators |
| title_sort | risk-taking behavior and capital adequacy in a mixed banking system: new evidence from malaysia using dynamic ols and two-step dynamic system gmm estimators |
| topic | HG1501 Banking |
| url | http://irep.iium.edu.my/51522/ http://irep.iium.edu.my/51522/ http://irep.iium.edu.my/51522/ http://irep.iium.edu.my/51522/1/51522-Risk-taking%20behavior%20and%20capital.pdf http://irep.iium.edu.my/51522/13/51522_Risk-taking%20behavior%20and%20capital%20adequacy_WOS.pdf http://irep.iium.edu.my/51522/14/51522_Risk-taking%20behavior%20and%20capital%20adequacy_SCOPUS.pdf |