Abstract

One of the anxieties of the Basel Committee on Banking Supervision is cyclical behavior of banks that has been addressed in its new Basel III framework. The 'countercyclical buffer' particularly targets at the extenuation of the allegedly harmful behavior of bank capital. Mainstream discourses on the subject usually assess a pro-cyclical behavior of banks' surplus capital but this paper examines mostly annual data by GDP as a deputation for the commercial cycle. Using collected annually data, this paper identifies a defining pro-cyclical behavior of Palestinian banks' capital.

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