Capital Adequacy Ratio - CAR
Also known as "Capital to Risk Weighted Assets Ratio (CRAR)."
This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world.
Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
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capital adequacy ratio — The proportion of a bank s total assets that is held in the form of shareholders equity and certain other defined classes of capital. It is a measure of the bank s ability to meet the needs of its depositors and other creditors. The minimum… … Big dictionary of business and management
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capital ratio — ➔ ratio * * * capital ratio UK US noun [C] ► BANKING, FINANCE CAPITAL ADEQUACY RATIO(Cf. ↑capital adequacy ratio) … Financial and business terms
adequacy — UK US /ˈædəkwəsi/ noun [U] ► the quality of being good enough for a particular purpose: the adequacy of sth »Questions were raised about the adequacy of the firm s control procedures. → See also CAPITAL ADEQUACY RATIO(Cf. ↑capital adequacy ratio) … Financial and business terms
ratio — the proportional relationship of one thing to another * * * ratio ra‧ti‧o [ˈreɪʆiəʊ ǁ ˈreɪʆoʊ] noun [countable] a relationship between two amounts that is represented by a pair of numbers showing how much greater one amount is than the other: •… … Financial and business terms
Capital requirement — The capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. The categorization of assets and capital is highly standardized so that it can be risk weighted.… … Wikipedia
capital ratio — / kæpɪt(ə)l ˌreɪʃiəυ/ noun same as capital adequacy ratio … Dictionary of banking and finance
Net capital rule — The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ( SEC ) in 1975 to regulate directly the ability of broker dealers to meet their financial obligations to customers and other creditors. Broker… … Wikipedia