CAPITAL ADEQUACY IN THE ROMANIAN BANKING SYSTEM

The purpose of this paper is to studying the existing national and internationalcriteria and methodologies related to the banking capitals measurement. We examine theminimum requirements for banking capital and the actual status of Romanian banks in termsof solvency ratio. The paper analyzes the risk-based capital ratios through a case study at thelevel of a banking society from Romania. We quantify the capital charges by reference to theregulatory capital expressed as a percentage of total risk-weighted assets and by reference tothe Tier 1 capital expressed as a percentage of risk-weighted assets. Our research revealsthat the level of capitalization is relevant for the ability of banks to absorb the lossesgenerated by either exogenous shocks induced by the domestic and internationalmacroeconomic environment, or by the inappropriate management of the endogenous risksassociated with banking activity.