Notice of RetractionEfficiency in banking capital regulation

Notice of Retraction

After careful and considered review of the content of this paper by a duly constituted expert committee, this paper has been found to be in violation of IEEE´s Publication Principles.

We hereby retract the content of this paper. Reasonable effort should be made to remove all past references to this paper.

The presenting author of this paper has the option to appeal this decision by contacting TPII@ieee.org.

This paper explains the efficiency of banking regulation of capital adequacy. It is divided into three sections. Section 1 gives the basic concept and the measurement of capital adequacy. Section 2 applies the Modigliani-Miller proposition to explain the efficiency of capital adequacy regulation. Section 3 provides a simple model focusing on the probability of a bank defaulting. By applying this model, I draw the conclusion that increasing a bank´s capital leads to a lower chance of it defaulting.