Keywords
How to Cite
Abstract
The capital stability of commercial banks constitutes one of the most critical pillars of modern financial systems, directly influencing macroeconomic resilience, monetary transmission, depositor confidence, and the prevention of systemic crises. The global financial crisis of 2007–2009, the European sovereign debt turbulence of 2010–2012, and the regional banking shocks of 2023 (Silicon Valley Bank, Credit Suisse) have collectively reaffirmed that adequate, high-quality, and well-structured capital is the principal defence line against insolvency. This thesis investigates the scientific and theoretical foundations that underpin the formation, measurement, and regulation of commercial bank capital stability. Drawing on classical capital structure theory (Modigliani & Miller, 1958), the buffer theory of bank capital, the franchise-value hypothesis, the regulatory-arbitrage paradigm, and the contemporary Basel III/Endgame framework, the study constructs a multi-layered analytical lens through which capital stability can be both conceptualized and operationalized. The thesis argues that capital stability is not a static accounting attribute but a dynamic equilibrium between regulatory minima, market discipline, internal risk appetite, and macroprudential conditions.
References
Modigliani, F., & Miller, M.H. The Cost of Capital, Corporation Finance and the Theory of Investment // The American Economic Review. — 1958. — Vol. 48, No. 3. — P. 261–297.
Bank for International Settlements (BIS). Basel III: International Regulatory Framework for Banks. — Basel: BIS, 2024.
Bank for International Settlements (BIS). Press Release: Basel III Risk-Based Capital Ratios Increase While Banks’ Leverage Ratio and Net Stable Funding Ratio Remain Stable in the Second Half of 2024. — Basel: BIS, 23 October 2025.
Basel Committee on Banking Supervision (BCBS). The Basel Framework: Consolidated Standards. — Basel: BIS, 2024.
Brookings Institution. What is Bank Capital? What is the Basel III Endgame? — Washington, DC: The Brookings Institution, 2024. URL:
Federal Reserve Board. Basel Regulatory Framework. — Washington, DC: Board of Governors of the Federal Reserve System, 2024.
Federal Reserve Board. Annual Large Bank Capital Requirements. — Washington, DC: Board of Governors of the Federal Reserve System, 2024.
Wu, A. Basel III Endgame: Should We Strengthen Capital Requirements? // Harvard Business Law Review. — 2025. — Vol. 15, No. 1. — P. 349–362.
Anginer, D., Demirgüç-Kunt, A., & Mare, D.S. Bank Capital and Systemic Stability. — Washington, DC: World Bank Open Knowledge Repository, Policy Research Working Paper. — 2023. URL:
Determinants of Bank Stability in Emerging Economies: Empirical Evidence from Vietnam. ResearchGate, 2024.
Determinants of Banking Stability in India // Bank Lending Research / Emerald Publishing. — 2024. — Vol. 38, No. 1. — P. 49–73.
Abusharbeh, M. Determinants of Bank Capital Adequacy: Empirical Insights from Palestine and the MENA Region // BBS Working Paper Series. — Arab American University Palestine, 2025.
Effects of the Basel III Framework on Capital Adequacy of Commercial Banks // International Journal of Finance and Accounting (IPRJB). — 2024.
The Impact of Key Regulatory Financial Indicators on Bank Stability // Financial Markets, Institutions and Risks (FMIR). — 2025.
Key Environmental, Social, and Governance Indicators across Countries: Evidence on Banking Stability // Eurasian Economic Review / Springer Nature. — 2025.
Skadden, Arps, Slate, Meagher & Flom LLP. Bank Capital Standards for Cryptoasset Exposures Under the Basel Framework. — New York: Skadden Insights, August 2024.