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This research examined the impact of Basel III capital regulation (BCR) on credit risk (CR) using a sample of 25 commercial banks in Lebanon over the period 2012–2017. BCR is measured using the capital adequacy ratio (CAR) and the common equity tier one ratio (CET1 ratio), CR is measured using net provision for credit losses /total assets. To analyze the data, we constructed a hybrid model based on 3 statistical approaches. First, we modelled the dual impact of BCR and CR using probabilistic inference in the framework of Bayesian Belief Network formalism (BBN). Second, to highlight more about the correlation between BCR and CR, we used Spearman correlation test as a nonparametric approach. Third to study the simultaneous effect of CAR and CET1 ratio on CR we applied multivariate regression analysis. By analyzing the probabilistic inference for the first approach we concluded that there is an effect of BCR on CR especially for the high level of CET1 ratio, but when we investigated more if this effect is significant using the Spearman correlation test and the multivariate regression analysis, we concluded that there is no effect statistically significant of Basel III capital regulation (BCR) on credit risk (CR).

A number of authors suggested that the impact of the macroeconomic factors on the incidence of the financial distress, and afterward in case of failure of companies. However, macroeconomic factors rarely, if ever, appear as variables in predictive models that seek to identify distress and failure; modellers generally suggest that the impact of macroeconomic factors has already been taken into account by financial ratio variables. This article presents a systematic study of this domain, by examining the link between the failure of companies and macroeconomic factors for the French companies to identify the most important variables and to estimate their utility in a predictive context. The results of the study suggest that several macroeconomic variables are strictly associated to the failure, and have a predictive value by specifying the relation between the financial distress and the failure.