Factors Affecting Commercial Banks’ Capital Adequacy Ratios in Gulf Cooperation Council (GCC) Countries

Abstract

This study seeks to identify factors that influence bank capital adequacy ratios for a sample of consists of 62 commercial banks listed on the stock markets operating in GCC countries over the time between 2011 and 2018 was used. To deal with the problems of the data set, we utilize the PCSE method. The empirical results suggested that among the CAMELS model variables, capital ratio, management efficiency, earning capacity, liquidity management, and sensitivity have a positive statistical significant influence on bank capital adequacy ratios. In contrast, Asset quality, market concentration, and bank size have a negative effect on commercial banks' capital adequacy ratios. Concerning macro-economic variables, the empirical results suggested that economic growth and inflation rate influence bank capital adequacy ratios.