[Revision] Bank Capitalization and Credit Risk.

VERY IMPORTANT: Due to the word limit, I’m not able to provide each and every detail here in this comment box, rather I’m uploading a few files named Important Instructions, Dissertation Structure, PGT Dissertation Handbook which gives the complete picture of the dissertation. You must read all the files before starting. Along with the above-mentioned files, I’m also uploading a few other files such as data sources etc. which are very crucial for the dissertation.Kindly read all the files that I’m uploading and then only start working on the dissertation. Hello! I’m providing below very important instructions and details that are crucial for the successful completion of this dissertation. They are as follows-1. I’m a postgraduate student currently studying Master’s in Finance in the UK. My dissertation title is “Bank Capitalization & Credit Risk’.2. The total word count of the dissertation is 12,000 words. I have specifically uploaded a Word document named ‘Dissertation Structure’ which highlights the structure of the dissertation and how the words should be tentatively allocated to each section.3. I’m also uploading a file named PGT Dissertation Handbook. It’s our official handbook by the university. It contains the dissertation structure and other very important information. Must read it thoroughly before starting with the dissertation. You can refer to the dissertation structure from this document also.4. I’m also uploading a file named ‘ABS (Econ+Fin)’. It’s an official list of Journal Title approved by our university. You must use research papers mentioned in Journal Title from this list only. And you also must use research papers from articles Ranking 3 or above, not less than that.5. For the whole dissertation, you should refer to between 50-70 research papers.6. I’m also providing an Excel file named ‘Word Bank Indicators’. It’s a dataset provided by our university. You should get data from this.7. I’m also providing a document mentioning a list of database resources. It contains sources such as Bloomberg, BoardEx, Datastream, WRDS etc. You should get data from the sources provided in this list.8. I’m also providing a few other files. Kindly read each and every file before starting with the dissertation. Now how to start with the dissertation?My research question is-“How does the level of bank capitalization affect the credit risk of banks?” Identify a benchmark paper that closely aligns with my thesis question. This will serve as my benchmark, especially if I encounter any technical difficulties.Then do the Introduction and Literature Review as usual.Add the testable hypothesis sectionFor the empirical analysis, you should conduct regressions in the following format: Y=a+bX+e. You will need to identify and inform me about your choice of dependent, independent and control variables.Select a baseline paper that aligns closely with your analysis approach. This will guide your empirical strategy and provide a comparative framework for your study. For example:Y=a+bX+e 1. Dependent Variable (Y): – Credit Risk (CR): This can be measured using proxies such as the ratio of non-performing loans (NPL) to total loans, loan loss provisions, or other risk metrics. 2. Independent Variable (X): – Bank Capitalization (BC): This can be measured using the capital adequacy ratio (CAR), equity to assets ratio, or Tier 1 capital ratio. 3. Control Variables (C): – Bank Size (SIZE): Measured by total assets.- Profitability (PROF): Measured by return on assets (ROA) or return on equity (ROE).- Loan Growth (LG): Measured by the annual growth rate of total loans.- Economic Conditions (EC): Macro variables such as GDP growth rate or unemployment rate.- Liquidity (LIQ): Measured by the liquid assets to total assets ratio. You can use statistical software such as Stata to run the regression analysis.

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