Basel III, Balance Sheet Structure and Bank Performance: A Balance-Sheet Transmission Channel Perspective (International Journal of Accounting, Finance, Auditing, Management and Economics)

Summary

• The conceptual article rests on an integrative literature review of 74 documents published between 1958 and 2026.p.2
• In Morocco, Basel III was transposed in phases between 2014 and 2025.p.4
• At end 2024, demand deposits represented 910 billion dirhams out of a total of 1,275 billion customer deposits, about 71%.p.24
• The five largest Moroccan banks hold about 76% of sector assets.p.24
• At end 2024 the average solvency ratio was 16.2% and the Tier 1 ratio 13.5%, against minima of 12% and 9%.p.24
• An ex ante estimate for banks in fifteen countries found the least costly NSFR compliance strategies reduced net interest margin by 70 to 88 basis points.p.16

Key insights

1. Basel III added a risk-insensitive leverage ratio and two liquidity standards, the LCR and the NSFR, to strengthened capital requirements.p.3
2. Prudential regulation moved from a single solvency ratio under Basel I (1988) to capital, leverage and liquidity constraints under Basel III (2010-2017).p.8
3. Capital, leverage, LCR and NSFR requirements affect different parts of the balance sheet and do not bind the same banks at the same time.p.2
4. Capital and liquidity decisions are taken jointly, so a model treating one as exogenous to the other is misspecified.p.13
5. ROE equals ROA divided by k, so raising k mechanically lowers ROE with ROA unchanged.p.21
6. In Morocco the average capital constraint is not binding, so its effects should concentrate on banks closest to the requirements.p.24
7. Proposed timing: LCR from 2015 to 2019, NSFR and leverage in 2018 internationally, and NSFR in Morocco from 2025.p.25