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Journal of Finance and Investment Analysis
This paper provides an empirical investigation on the relationship between Basel II capital requirement and the risk-taking behaviour of banks in Brazil. Building on previous studies, two econometric models were employed: the simultaneous equations model of Shrieves and Dahl (1992), and the model for bank portfolio behaviour developed by Berger and Udell (1994). In our sample of Brazilian banks, we found sufficient evidence that Basel II induced banks to increase their capital adequacy ratio.fatcat:pxxq7agtjjfrfe4xzs6plnwh6a