CAPITAL ADEQUACY IN THE ROMANIAN BANKING SYSTEM

                            Socol Adela, Associate Professor PhD
                         „1 Decembrie 1918” University of Alba Iulia
                                   adelasocol@yahoo.com


ABSTRACT: The purpose of this paper is to studying the existing national and international
criteria and methodologies related to the banking capitals measurement. We examine the
minimum requirements for banking capital and the actual status of Romanian banks in terms
of solvency ratio. The paper analyzes the risk-based capital ratios through a case study at the
level of a banking society from Romania. We quantify the capital charges by reference to the
regulatory capital expressed as a percentage of total risk-weighted assets and by reference to
the Tier 1 capital expressed as a percentage of risk-weighted assets. Our research reveals
that the level of capitalization is relevant for the ability of banks to absorb the losses
generated by either exogenous shocks induced by the domestic and international
macroeconomic environment, or by the inappropriate management of the endogenous risks
associated with banking activity.

Key Words: Solvency Indicators, Adequate Banking Capitalization, Regulatory Capital

JEL Classification: G21, G24