Capital Adequacy Ratio
(redirected from Adequacy, Capital)Capital Adequacy Ratio
A measure of a bank's ability to meet its obligations relative to its exposure to risk. The capital adequacy ratio exists to ensure that a bank is able to handle losses and fulfill its obligations to account holders without ceasing operations. It is calculated as:
CAR = ( Tier 1 Capital + Tier 2 Capital ) / Risk-weighted assets.
CAR = ( Tier 1 Capital + Tier 2 Capital ) / Risk-weighted assets.
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