Open AccessEmpirical analysis of Brazilian banks' capital buffers during the period 2001-2011
Author(s) -
Vinícius Cintra Belém,
Ivan Ricardo Gartner
Publication year - 2016
Publication title -
revista contabilidade and finanças
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.223
H-Index - 6
eISSN - 1808-057X
pISSN - 1519-7077
DOI - 10.1590/1808-057x201612300
Subject(s) - cost of capital , bankruptcy , capital (architecture) , capital adequacy ratio , economic capital , sample (material) , business , financial capital , monetary economics , economics , risk adjusted return on capital , finance , capital formation , market economy , geography , human capital , archaeology , chemistry , chromatography , incentive
International literature indicates that the capital buffers held by banks result notably from the trade-off that exists between the cost of holding capital, adjustment costs, and bankruptcy costs, which all have a direct impact on banks' capital structures. The aim of this paper is to study the degree of sensitivity of Brazilian banks' capital buffers to the determining factors established in the literature, by using a sample of 121 banks, covering the period from 2001 to 2011. The empirical analysis that was carried out found that there was a significant cost of adjusting capital buffers for the Brazilian banks. At the same time, bankruptcy cost indicated a positive relationship between risk profile and capital buffers, while the cost of holding capital did not exhibit statistical significance in the analysis