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Author: James R. Barth Publisher: ISBN: Category : Languages : en Pages : 55
Book Description
After the Latin American Debt Crisis of 1982, the official response worldwide turned to minimum capital standards to promote stable banking systems. Despite their existence, however, such standards have still not prevented periodic disruptions in the banking sectors of various countries. After the 2007-2009 crisis, bank capital requirements have in some cases increased and overall have become even more complex. This paper reviews:(1) the extent to which Basel-style capital adequacy guidelines have evolved, becoming higher in some cases and overall more complex, (2) how the US implementation of these guidelines has contributed to regulatory complexity, even when omitting other bank capital regulations that are specific to the US, and (3) how the US regulatory measures still do not provide equally valuable information about whether a bank is adequately capitalized.
Author: James R. Barth Publisher: ISBN: Category : Languages : en Pages : 55
Book Description
After the Latin American Debt Crisis of 1982, the official response worldwide turned to minimum capital standards to promote stable banking systems. Despite their existence, however, such standards have still not prevented periodic disruptions in the banking sectors of various countries. After the 2007-2009 crisis, bank capital requirements have in some cases increased and overall have become even more complex. This paper reviews:(1) the extent to which Basel-style capital adequacy guidelines have evolved, becoming higher in some cases and overall more complex, (2) how the US implementation of these guidelines has contributed to regulatory complexity, even when omitting other bank capital regulations that are specific to the US, and (3) how the US regulatory measures still do not provide equally valuable information about whether a bank is adequately capitalized.
Author: World Bank Publisher: World Bank Publications ISBN: 1464814961 Category : Business & Economics Languages : en Pages : 281
Book Description
Over a decade has passed since the collapse of the U.S. investment bank, Lehman Brothers, marked the onset of the largest global economic crisis since the Great Depression. The crisis revealed major shortcomings in market discipline, regulation and supervision, and reopened important policy debates on financial regulation. Since the onset of the crisis, emphasis has been placed on better regulation of banking systems and on enhancing the tools available to supervisory agencies to oversee banks and intervene speedily in case of distress. Drawing on ten years of data and analysis, Global Financial Development Report 2019/2020 provides evidence on the regulatory remedies adopted to prevent future financial troubles, and sheds light on important policy concerns. To what extent are regulatory reforms designed with high-income countries in mind appropriate for developing countries? What has been the impact of reforms on market discipline and bank capital? How should countries balance the political and social demands for a safety net for users of the financial system with potentially severe moral hazard consequences? Are higher capital requirements damaging to the flow of credit? How should capital regulation be designed to improve stability and access? The report provides a synthesis of what we know, as well as areas where more evidence is still needed. Global Financial Development Report 2019/2020 is the fifth in a World Bank series. The accompanying website tracks financial systems in more than 200 economies before, during, and after the global financial crisis (http://www.worldbank.org/en/publication/gfdr) and provides information on how banking systems are regulated and supervised around the world (http://www.worldbank.org/en/research/brief/BRSS).
Author: James R. Barth Publisher: ISBN: Category : Languages : en Pages : 41
Book Description
Bank regulators consider minimum capital standards essential for promoting well-functioning banking systems. Despite their existence, however, such standards have been insufficient to prevent periodic disruptions in the banking sectors of various countries. The most recent disruption was the global banking crisis of 2007-2009. After the crisis, bank capital requirements have increased and become more complex. Clearly, capital requirements are important as a first line of defense in ensuring safer and sounder banking industries. Given the importance of capital requirements, this paper explains and documents:(1) the extent to which capital requirements have evolved, becoming higher and more complex, and (2) how all the regulatory capital ratios that now exist to account for differences among banks, such as asset size and business model, do not provide equally valuable information about whether a bank is adequately capitalized. A simple minimum regulatory capital ratio will likely promote a more stable banking system.
Author: Mr.Ralph Chami Publisher: International Monetary Fund ISBN: 148431381X Category : Business & Economics Languages : en Pages : 20
Book Description
This paper compares the current regulatory capital requirements under the Dodd-Frank Act (DFA) and the 10-percent leverage ratio, as proposed by the U.S. Treasury and the U.S. House of Representatives' Financial CHOICE Act (FCA). We find that the majority of U.S. banks would not qualify for an "off-ramp"option—where regulatory relief is offered to FCA qualifying banks (QBOs)—unless considerable amounts of capital are added, and that large banks are much closer to the proposed leverage threshold and, therefore, are more likely to stand to gain from regulatory relief. The paper identifies an important moral hazard problem that arises due to the QBO optionality, where banks are likely to increase the riskiness of their asset portfolio and qualify for the FCA “off-ramp” relief with unintended effects on financial stability.
Author: Prasad Krishnamurthy Publisher: ISBN: Category : Languages : en Pages : 24
Book Description
This article considers two fundamental issues in the design of bank capital regulation -- the choice of a rule or standard and the level of complexity in that rule or standard -- by revisiting the historical adoption of minimum-capital requirements and risk-based capital requirements. Both theory and the historical evidence suggest that a minimum-capital requirement is optimal when bank regulators seek to manage risks that are costly to estimate and that a risk-weighted capital requirement, in contrast, requires a precise understanding of both bank risk and the strategic response of banks to regulation. This article uses historical evidence to illustrate how cost benefit analysis can be useful in forcing regulators to confront their theories with evidence. The analysis of rules, standards, and complexity that it develops can also inform capital regulation even when the conclusions of cost-benefit analysis are ambiguous.
Author: Vanessa Le Leslé Publisher: International Monetary Fund ISBN: 1475502656 Category : Business & Economics Languages : en Pages : 50
Book Description
In this paper, we provide an overview of the concerns surrounding the variations in the calculation of risk-weighted assets (RWAs) across banks and jurisdictions and how this might undermine the Basel III capital adequacy framework. We discuss the key drivers behind the differences in these calculations, drawing upon a sample of systemically important banks from Europe, North America, and Asia Pacific. We then discuss a range of policy options that could be explored to fix the actual and perceived problems with RWAs, and improve the use of risk-sensitive capital ratios.
Author: Connel Fullenkamp Publisher: International Monetary Fund ISBN: 1498309763 Category : Business & Economics Languages : en Pages : 36
Book Description
Despite revisions to bank capital standards, fundamental shortcomings remain: the rules for setting capital requirements need to be simpler, and resolution should be an essential part of the capital requirement framework.We propose a new system of capital regulation that addresses these needs by making changes to all three pillars of bank regulation: only common equity should be recognized as capital for regulatory purposes, and risk weighting of assets should be abandoned; capital requirements should be assigned on an institution-by-institution basis according to a regulatory (s,S) approach developed in the paper; a standard for prompt, corrective action is incorporated into the (s,S) approach.
Author: Arno Hetzel Publisher: GRIN Verlag ISBN: 3668587949 Category : Business & Economics Languages : de Pages : 17
Book Description
Studienarbeit aus dem Jahr 2016 im Fachbereich BWL - Investition und Finanzierung, School of Oriental and African Studies, University of London, Veranstaltung: Bank Financial Management, Sprache: Deutsch, Abstract: In this paper, the impact of higher capital requirements to the capital adequacy of banks as well as its consequences to the financial system will be discussed. Therefore, these terms will be explained and an overview of the developed guidelines will be given. With the help of that knowledge, the actual challenges for financial institutions can be set in relation to these rules in order to find an appropriate level of banking regulation. This topic has a special meaning to society, because the banking sector is highly leveraged and can cause great economic damage if there is a lack of sufficient risk management.
Author: James R. Barth
Author: James R. Barth
Author: World Bank
Author: 
Author: James R. Barth
Author: Mr.Ralph Chami
Author: Prasad Krishnamurthy
Author: Vanessa Le Leslé
Author: Lawrence D. Cluff
Author: Connel Fullenkamp
Author: Arno Hetzel