Determinants of capital adequacy ratio: evidence from selected Malaysian commercial banks / Nurul Wahidah Subki

Capital adequacy ratio (CAR) is the ratio propounded by the regulatory authority in the banking sector to judge the health of the banking system and to ensure that banks can take up a reasonable level of losses arising from operational losses. This study is to analyze the factors that influence capital adequacy ratio in Malaysian commercial banks. In this study, capital adequacy ratio acted as dependent variable while bank size, loan loss reserve, leverage and profitability are independent variables used in the study. The method used for regression is using STATA 11.2. Findings showed that bank size and leverage are influencing capital adequacy ratio of commercial banks in Malaysia. However, two variables which are loan loss reserve and profitability is not influencing capital adequacy ratio in Malaysian commercial banks.