A proposed accounting model to measure the impact of Basel III decisions on financial performance in light of the moderating role of bank characteristics An applied study

Abstract

Purpose: the first purpose of the study is to analyze the impact of Basel III requirements-capital adequacy ratio and leverage-on financial performance. The second purpose is to analyze the moderating role of bank characteristics-bank size and age-on the relationship between Basel III requirements and financial performance. Design/methodology/approach: to achieve the purpose of the study, the researcher conducted an applied study on a sample of banks operating in Egypt during the period from 2018 to 2024. Manual content analysis was used to analyze the banks' financial reports, and multiple regression was used to test the study hypotheses using the statistical analysis program (SPSS) version 26 . Findings: the study found a positive and significant effect of both capital adequacy ratio and leverage on the bank's financial performance. The study also found a positive and significant effect of the moderating variable, bank size, on the relationship between Basel requirements and financial performance. Meanwhile, the moderating variable, bank age, had a positive and insignificant effect on the relationship between Basel requirements and financial performance. Practical implications: the paper finding recommends that banks' management and other policy makers should consider the effect of bank size while devising financial soundness policies to ensure optimal level of banks' financial soundness aimed at improving banks' financial performance.