Capital Adequacy Ratio
/ˈkæpɪtl ˌædɪˈkwəsi ˈreɪʃi.oʊ/
Definitions
- (n.) A financial metric used to assess a bank's capital relative to its risk-weighted assets, ensuring sufficient capital to absorb losses and protect depositors.
The regulator requires banks to maintain a minimum capital adequacy ratio to reduce insolvency risk.
Forms
- capital adequacy ratio
- capital adequacy ratios
Related terms
See also
Commentary
Often expressed as a percentage, this ratio is central in banking law and prudential regulation to ensure institutional resilience.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.