There are several definitions of Leverage Ratio in context of Banking Sector but it seems like it is no different from CRAR (Capital Adequacy Ratio), could someone explain what's the real difference between both concepts.
Leverage ratios are typical simple ratios of debt to equity while capital adequacy ratios are usually risk weighted.
The capital adequacy ratio, or CAR, is a metric applied specifically to banks, while a common leverage ratio is used by investors to evaluate virtually any type of firm they choose to examine. The CAR is used to assess the financial risk a bank is exposed to through its existing loans. The ratio is risk-weighted and expressed as a percentage of the total exposure. ...
Not simply a single leverage ratio, but rather several financial leverage metrics may be utilized to gauge a business's financial health. Two of the most commonly considered leverage ratios are the debt-to-equity ratio and the long-term debt-to-capitalization ratio.
What is the difference between the capital adequacy ratio and the leverage ratio?