A study on the effects of capital adequacy requirements, ownership structure and franchise value on the risk preferences of selected banks listed in the Philippine Stock Exchange for the period 1996-2005

• Main Authors: Esquierdo, Arrolyn Kate D., Franco, Cristine Abbey F., Reyes, Rene S., Jr., Yu, Hun Ling T.
• Format: text
• Language: English
• Published: Animo Repository 2006
• Subjects: Banks and banking; Finance > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14166
• Institution: De La Salle University

The study examine the relationship of specific risk such as Total risk, Firm-specific risk, Systematic risk, and Insolvency risk between Capital Adequacy requirement, Ownership Structure and Franchise Value. This study determines the level of risk affected by the independent variables and identifies which of these factors affect the four types of risk. Using the sample of ten universal and commercial banks listed in Philippine Stock Exchange, the group uses the banks' stock returns. PSEi weekly stock return and changes on yield of ten-year government bond to determine total risk, firm-specific risk and systematic risk. Regression was used as a statistical tool in order to determine the relationship of the risks mentioned to capital adequacy requirement, ownership structure and franchise value. This study gives researchers a clear understanding of factors that affect risk which may be helpful to the related study they try to pursue. The result shows an inverse relationship between Total risk and Franchise value as well as Firm-specific risk. On the other hand, Insolvency risk is positively affected by Capital Adequacy Requirement. None of the independent variables show an effect on systematic risk. Ownership Structure has no significant relationship on any of the four types of risk mentioned. The relationship between independent variables and other types of risk aside from those used in this study have yet to be examined.