The Trade-off Between Banking Risk and Profitability Under Basel III Capital Regulation in Lebanese Banks
Year: 2024
Type: article
Abstract: This research examined the trade-off between risk and profitability under Basel III capital regulation (BCR) using a sample of 30 commercial banks in Lebanon. The main question of this research is: What is the trade-off between risk and profitability under Basel III capital regulation (BCR)? To answer this question, the authors considered a qualitative approach in the study. The authors used semi-structured interviews with the chief risk officer (CRO) for the sample. In order to examine the impact of Basel III capital regulation (BCR) on risk and profitability, the authors asked Banks’ CFOs to rate risk and profitability based on 5 scale metrics before and after the application Of Basel III in Lebanon. To analyze the data, the authors used ATLAS. Ti version 8.3 software. The results showed that after the application of the Basel III accord in Lebanon risk and profitability decreased in banks. The authors also noticed this effect is much greater in small and high-risk banks. This result aligns with Klomp and de Haan's findings that the Basel III accord has more effect on small and high-risk banks and with Tran, Lin, and Nguyen’s findings that the relationship between capital regulation and bank performance is not linear and depends on the level of capitalization of banks.
Authors: Nadim Alfouhaili, Thawra Alhilfi
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4405769692