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Home > QFINANCE Dictionary > Definition of capital adequacy ratio

Definition of

capital adequacy ratio


percentage of bank's assets represented by capital an amount of money which a bank has to hold in the form of stockholders' equity, shown as a proportion of its risk-weighted assets, agreed internationally not to fall below 8%.

Related definitions of "capital adequacy ratio"

Recommended Further Reading (Term count)
  • Capital Adequacy
    Capital adequacy provides regulators with a means of establishing whether banks and other financial institutions have sufficient capital to keep them out of difficulty. Regulators use a Capital Adequacy Ratio (CAR), a ratio of a bank’s capital to its assets, to assess risk. The two most important measures of capital adequacy are those specified by the Basel Committee of the Bank for International Settlements. The Basel Capital Accord, which came...
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  • Basel II—Its Development and Aims
    This checklist describes Basel II, and outlines its aims and purpose.
  • Capital Adequacy Requirements for Islamic Financial Institutions: Key Issues
    by M. Kabir Hassan, Ebid Smolo
    The Islamic financial industry (IFI) has grown tremendously in the last two to three decades. In short, Islamic finance refers to financial activities that are guided by the teachings of shariah (Islamic law), which strictly prohibits the payment and receipt of interest. Today, Islamic finance attracts both Muslim and non-Muslim market participants. The worldwide market for shariah-compliant Islamic financial products is estimated to be between...

Definitions of ’capital adequacy ratio’ and meaning of ’capital adequacy ratio’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’capital adequacy ratio’ and other financial terms with our online QFINANCE Financial Dictionary.

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