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A high capital requirement is often a barrier to entry to a market.
Some Savings and Loan Associations were closed because they were unable to meet the new capital requirements.
In the United States, the capital requirement for banks is based on several factors, but is mainly focused on the weighted risk associated with each type of asset held by the bank. The capital requirements guidelines are used to create capital ratios, which can then be used to evaluate and compare lending institutions based on their relative safety.
An adequately capitalized institution, based on the Federal Deposit Insurance Act, must have a Tier 1 capital-to-risk weighted assets ratio of at least 4%. Institutions with a ratio below 4% are considered undercapitalized and those below 3% are significantly undercapitalized.