The Impact of Macroeconomic Factors on Capital Adequacy of the Russian Banking Sector in the Context of Countercyclical Banking Regulation

This study aims to expand the existing literature on the identification of macroeconomic and socio-economic factors that can be used in predicting bank capital adequacy ratios. The study utilizes regression analysis. Empirical results suggest that there is a negative relation between household income per capita and bank’s capital adequacy ratios, which confirms the hypothesis of pro-cyclical lending. It is also shown that changes in household income affect both total capital and Tier 1 capital adequacy ratios, while the relation with “gap” indicators is not significant in any models.