Capital Adequacy Ratio - CAR
Definition of 'Capital Adequacy Ratio - CAR'A measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures.Also known as "Capital to Risk Weighted Assets Ratio (CRAR)." |
|
Investopedia explains 'Capital Adequacy Ratio - CAR'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. |
Related Definitions
Articles Of Interest
-
Banking Stress Tests: Would Yours Pass?
In weaker economic times, banks may be tested by the government to see how safe they are. -
Is Your Bank On Its Way Down?
Find out how the Tier 1 capital ratio can be used to tell if your bank is going under. -
How Basel 1 Affected Banks
This 1988 agreement sought to decrease the potential for bankruptcy among major international banks. -
Quants: The Rocket Scientists Of Wall Street
Blend math, finance and computer skills to command a high - and well deserved - salary. -
Calculating The Means
Learn more about the different ways you can calculate your portfolio's average return. -
R-Squared
Learn more about this statistical measurement used to represent movement between a security and its benchmark. -
Mitigating Downside With The Sortino Ratio
Differentiate between good and bad volatility with the Sortino Ratio. -
Quantitative Analysis Of Hedge Funds
Hedge fund analysis requires more than just the metrics used to analyze mutual funds. -
Rule Of 72
Learn more about this quick approximation that can determine roughly the number of years it'll take your money to double. -
How To Use Facebook As A Marketing Tool
Facebook can be a viable marketing platform for your business. It can even earn you revenue.