Higher capital ratios in banks do not always reduce risk, as shown by a study of 1,992 banks in 39 OECD countries from 1999 to 2013. While overall capital ratios improve bank efficiency and profitability, risk-based ratios do not lower bank risk. This raises concerns about the accuracy of risk calculations and regulatory oversight. The new Basel III guidelines, which require higher capital and liquidity ratios, may negatively impact the efficiency and profitability of highly liquid banks.