n Journal of Strategic Studies : A Journal of the Southern Bureau of Strategic Studies Trust - Bank capital regulation, bank capital and risk-taking : an analysis of commercial banks in Zimbabwe

Volume 1, Issue 1
  • ISSN : 2076-6645
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The study investigates the impact of Risk-Based Capital (RBC) regulation on bank capital. Building on past work and using a dynamic panel data model, and after controlling for internally generated capital target we found no evidence of the impact of capital regulation pressure on bank capital in Zimbabwean commercial banks over the period 2000-2006. Regulation pressure is insignificant even on undercapitalized banks. This is in contrast to existing evidence found by Ghosh et al (2003) in India or in UK (Ediz (1998) who found significant effects on undercapitalised banks. Capital regulation enforcement may be considered to be lax over the period due to lack of centralised bank regulatory and supervisory functions. Nonetheless, we found commercial banks to meet their capital needs by increasing both capital and portfolio risk levels.

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