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http://dx.doi.org/10.15207/JKCS.2019.10.6.203

BIS Capital Adequacy Ratio Management by Mutual Savings Banks  

Kim, Daebeom (Financial Supervisory Service)
Lee, Jong Eun (Sungkyunkwan University, Business School)
Publication Information
Journal of the Korea Convergence Society / v.10, no.6, 2019 , pp. 203-218 More about this Journal
Abstract
Using the sample of 104 mutual savings banks inspected by the Financial Supervisory Service (FSS) on June 2011, this study examines if mutual savings banks manage BIS capital adequacy ratio using allowance for bad debts through comparison of BIS capital adequacy ratio before and after the 2011 when mutual savings banks experienced a large-scale restructuring by financial supervisory authorities. We find that mutual savings banks mainly use the allowance for bad debts to manage BIS capital adequacy ratio. It also shows that mutual savings banks with a business suspension order by FSS manage BIS capital adequacy ratio more than the others. Lastly, we find that Non Big4 auditors as well as Big 4 auditors don't effectively audit the use of the allowance for bad debts for mutual savings banks to manage their BIS capital adequacy ratio.
Keywords
Mutual Savings Banks; BIS capital adequacy ratio; allowance for bad debts; Big 4 auditor; audit quality;
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Times Cited By KSCI : 2  (Citation Analysis)
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