ABSTRACT
The main objective of this study was to inspect and establish the relationship between capital adequacy regulations and operational efficiency of banks. Panel data of 23 Bangladeshi commercial banks for the period of 2013–17 were employed and analyzed. Empirical findings exhibit a significant positive impact of capital adequacy ratio on operational efficiency of banks. This rapport suggests that the capital adequacy requirement not only fortifies financial steadiness, but also increases operational efficiency of banks by inhibiting the moral hazard problem. This outcome also suggests that minimum capital requirements impact a bank’s decision to reexamine its inner operations policy in terms of issues of corporate governance, risk evaluation techniques, credit appraisal processes, employment of more eligible and trained staffs, and superior internal control processes.
