A business firm's capital is expected to serve a variety of purposes. In the case of a bank, capital helps establish a level of confidence sufficient to attract enough deposits to fund its operations. Further, capital serves as a cushion to absorb unforeseen losses so that the bank can continue...

Our concern in this article is two-fold: first to see whether the determinants of bank distress and failure have been any different in the GFC from previous years: second to see whether simple measures of capital adequacy outperform their risk-weighted counterparts as predictors, despite the...