Małgorzata Białas

University of Science and Technology in Cracow

Evolution of capital adequacy ratio

Adrian Solek

Cracow University of Economics

ABSTRACT. The capital adequacy ratio (CAR) determines the ratio of a bank‘s core capital to the assets and off-balance liabilities weighted by the risk. The core capital of the bank is supposed to absorb the potential losses due to the risk of the banking activities. It has been specified that the value of this coefficient cannot be lower than 8%. Throughout the years the way of calculating the ratio has been changing, which is the subject of this paper. In the article the situation of Polish and Ukrainian banking sector has also been analyzed from the point of view of the coefficient in question.

Received: May, 2010

1st Revision: September, 2010

Accepted: October, 2010

JEL Classification:E5, P2

Keywords: capital adequacy ratio (CAR), banking sector, Poland