Impact of Basel Capital Accord on Bank Behaviour, the impact of Basel Risk based capital requirement (accord I) on Bank performance in the Context of a Small Service-Based island Economy

This paper tests the effect of the Basel Risk Based Capital Requirements (Basel Accord 1) on Mauritian banks' behaviour, using a sample of 9 commercial banks. In the absence of any simultaneity between change in capital ratio and change in credit risk following the application of 3SLS to an extension of the model proposed by Shrieves and Dahl (1992) , the study applies the Arellano-Bond GMM technique to provide unbiased and more efficient estimates by taking into account dynamic framework. The main result emanating from this research reveals that banks' response to the Basel Risk -Based Capital Accord I requirement, is weak in the Mauritian context and under the period of study

Global Financial market tribulations-upshots on major Banks costs and profits - A Mauritian perspective

This paper appraises the upshots on Mauritian Banks following recent tribulations in global financial markets using data for the period 2000-2011. Using data from Banks' annual reports, a sample of 9 banks that existed during this period is taken to investigate the impact of recent tribulations in global financial markets on the costs and profits of the banks. Plain OLS results suggest that financial crisis has had no impact on the performance of the domestic banking sector as shown by the insignificance of the financial dummy variable. To have a more efficient and reliable estimate, the model has been tested using GMM. The GMM results also confirm the insignificance of the financial crisis dummy, which indicates that the Mauritian banking sector is very resilient to external economic and financial shock

An Econometric Analysis regarding the path of Non Performing Loans- A Panel Data analysis from Mauritian Banks and Implications for the Banking Industry

The present study pertains to unravelling the internal (bank specific) and external (macroeconomic) determinants of nonperforming loans in Mauritius using annual report data from a panel of 10 existing banks and macroeconomic data for the period 2000 to 2012. The model used in the present instance comprises of a vector of bank specific and macro economic variables which include the inflation rate, lending interest rates, growth of the construction sector and tourism sector as well as global variables such as the Euro zones GDP growth. The model is tested both in a static and dynamic framework. Four estimation techniques are considered, viz Fixed Effects, differenced GMM, System GMM and Random coefficient estimation. The results indicate that, notwithstanding there are many significant factors influencing NPL, the most critical elements nevertheless remain declines in the construction sector and the rise in cross border loans. Interestingly, the study provides important policy insights which centres on the improvement of credit concentration guidelines as well as the modification of the MCIB reportin