earticle

영어

The purpose of this study is to empirically examine bank behavior with respect to observed changes in bank lending. Under Basle Accord this variable is related to capital ratio. Lending is influenced by economic conditions that maybe change the probability of insolvency. If the probability of borrower default increases, thus increase the probability of bank failure, banks want to reduce their default risk and will reduce lending under the norm. The same with this case, If the cost of lending increases and hence the profit of bank reduces, banks will reduce lending under the norm. To complete the purpose of this study, the simultaneous equations model developed by Shrieves-Dahl(1992), and later modified by Aggarwal-Jacques(1998) to study the impact of risk-based capital, is used to examine how capital regulations simultaneously influenced bank lending. This study analyzes the annual data on domestic banks for the period from 1988 to 2000 and divided the period into two sub-periods, periodⅠ(1988-1992)·poriodⅡ(1993-2000). Data were obtained from KIS-FAS database and Korea Bank annual reports. The main results of this study can be summarized as this. I find some evidence that supports significant relation between bank lending reduction and capital regulation.