التكامل الاقتصادي
Volume 13, Numéro 3, Pages 191-204
2025-09-30
The Role Of Bank Capital In Absorbing Credit Risk According To The Basel Committee On Banking Supervision: The Case Of The Algerian Banking System
Authors : Kies Mohammed El Amine . Touat Othmane .
Abstract
This study aims to analyze the role of bank capital in absorbing credit risk in Algeria, by assessing the extent to which banks comply with capital adequacy requirements in accordance with the Basel Committee’s recommendations. The researcher employed a descriptive and analytical approach, combining a theoretical review of the Basel accords with a statistical analysis of financial data from Algerian banks—both public and private. The findings indicate that the Algerian banking system demonstrates relative regulatory robustness and solid compliance, as capital adequacy ratios have surpassed the minimum thresholds stipulated in Basel III, despite a downward trend in the overall solvency ratio. Public banks have shown a steady improvement in both total and Tier 1 solvency ratios, with annual growth rates indicating structural reforms such as capital increases and enhanced asset management. Furthermore, the narrowing gap between the two solvency ratios signals an improvement in the quality—not just the quantity—of regulatory capital. Meanwhile, private banks have maintained relative stability, without significant qualitative growth.
Keywords
Total Capital Ratio ; Tier 1 Capital Ratio ; Core Capital ; Risk-Weighted Assets ; Financial Resilience
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