International Journal of Economics, Commerce and Management United Kingdom Vol. IV, Issue 7, July 2016 Licensed under Creative Common Page 247 http://ijecm.co.uk/ ISSN 2348 0386 “DETERMINANTS OF CAPITAL ADEQUACY RATIO” A PERSPECTIVE FROM PAKISTANI BANKING SECTOR Usman Masood Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Islamabad, Pakistan ozman782003@yahoo.com Sanaullah Ansari Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Islamabad, Pakistan sanaullah@szabist-isb.edu.pk Abstract The survival of Banks is vested with the maintenance of sufficient capital and it serves as buffer in the event of liquidity crunch. This study analysed the bank specific factors which had an impact on the determination of Capital Adequacy Ratio (CAR). The impact of ROA(Return on Assets), ROE (Return on Equity), LAT (Loan to Asset ratio), LLR (Loan Loss Reserves), NPL (Non-Performing Loans), DAR (Deposit Asset Ratio), EAR (Equity Asset Ratio) and Ownership concentration with a level of more than 10%, 25% and 50% was analysed by using Fixed Effect Method and the validity was tested by Hausman test. The results proved that Random Effect Model is better suited in this case. The data of 14 Pakistani Commercial Banks which were included in the KSE (Karachi Stock Exchange) 100 Index was gathered for the period 2008- 2014. The results revealed that the LAT and ownership concentration of more 50% had a significant but a negative impact on the CAR. The EAR, DAR, LLR had a significant and positive impact the determination of CAR, whereas the Size of the Bank, ROA, ROE and NPL had no impact on CAR. Keywords: Capital Adequacy Ratio, Pakistani Banks, Bank specific, ownership concentration, Loan Loss Reserves