Gutierrez, Johann Henry C.Tamayo, Richard Antonio M.2025-01-032025-01-032003-03https://selib.upd.edu.ph/etdir/handle/123456789/3911The 1997 Asian financial crisis exposed Philippine banks to numerous and drastic loan defaults and losses. In line with this, the Banko Sentral ng Pilipinas issued the BSP Circular No. 280, requiring banks to follow a set of minimum capital asset ratios in addition to the previous requirements for capital adequacy. The said circular aims to strengthen the banking industry by enforcing more stringent loan screening procedures. On the other hand, critics say that such a circular will instead greatly worsen the state of an economy since it would curtail loan supply, blocking investments, hindering future economic growth. The researchers employed the two-stage least squares regression approach in studying the effects of the new requirement on the absolute level of loans and deposits across the banking industry through time. The researchers found out that the additional capital asset ratio did not limit the supply of loans and deposits in the Philippine banking industry.enCapital investmentBanking industryBank behaviorInvestmentPhilippine bankingBankingThesis