TITLE

The effects of regulatory stringency and risk sensitivity on banks

AUTHOR(S)
Argimon, Isabel; Ruiz-Valenzuela, Jenifer
PUB. DATE
March 2011
SOURCE
Journal of Banking Regulation;Mar2011, Vol. 12 Issue 2, p144
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The EU's transposition of Basel II into European law has been done through the Capital Requirements Directive. Although the Directive establishes, in general, uniform rules to set capital requirements across European countries, there are some areas where the Directive allows some heterogeneity. In particular, Member States are asked to choose among different possibilities when transposing the Directive, which are called national discretions (ND). The main objective of our research is to use such observed heterogeneity to gather empirical evidence on the effects on European banks of more or less stringency (ST) and more or less risk sensitivity (RS) in capital requirements. Following the approach in Barth et al, we build index numbers for groups of ND, and applying the approach in Altunbas et al we provide evidence on their effect on banks' risk, capital, efficiency and costs. We show that more ST and more RS in regulation does not always result in a trade-off between efficiency and solvency: the impact depends on the area of ND to which such characteristics apply.
ACCESSION #
59837179

 

Related Articles

  • A Guide to Regulatory Capital Requirements for European Banks.  // Venulex Legal Summaries;2009 Q3, Special section p1 

    The article discusses the proposed amendments to U.S. regulatory capital requirements for European banks. The objective of the Basel II Regulatory Capital Accord is discussed. A look at how the Basel II Accord and the European Union (EU) Capital Requirements Directive (CRD) have undue benefit to...

  • The Bank Capital Regulation and Monetary Policy. DAI Junxun // Canadian Social Science;8/31/2012, Vol. 8 Issue 4, p38 

    Bank capital regulation under Basel Accord has changed the allocation of credit funds and the operation rule of the economy in great degree, and subsequently affected the foundation condition and transmission mechanism of the monetary policies. Given the business cycle, this paper makes the...

  • The Key Challenges of the New Bank Regulations. Teply, Petr // World Academy of Science, Engineering & Technology;Jun2010, Issue 42, p1491 

    No abstract available.

  • The Promise and Challenges of Bank Capital Reform. ELUL, RONEL // Business Review (Federal Reserve Bank of Philadelphia);2013 Third Quarter, p23 

    The article focuses on the challenges of bank capital reform in the U.S. It examines how and why the banking industry should be regulated. It states that one of the important ways to regulate banks is through capital requirements. It highlights that the 1988 Basel Accord was first international...

  • PARTICULARITIES OF THE ROMANIAN BANKING SYSTEM IN THE EUROPEAN BANKING SYSTEM. Loredana, Ciurlău // Annals of the University of Oradea, Economic Science Series;2008, Vol. 17 Issue 3, p710 

    The integration in the European Union does not involve only the economical sector, even if it is the most important, but also a redressing of the other components of the social life, assured by the constant increase of the GIP, of the stopping of the inflation and the reduction of the...

  • Why the Germans are leading the lending.  // EuroProperty;3/1/2010, p16 

    In this article, the author discusses the role of Germany in providing funds all over the Europe, liquidity, and debt refinancing. He is critical of the role of Germany in providing, financing to other European countries. He states because of its culture of property lending and Basel II norms,...

  • BASEL II IMPLEMENTATION -- RETAIL CREDIT RISK MITIGATION. Dohnal, Marek // 11th International Conference on Finance & Banking: Future of th;2007, p36 

    The main objective of this paper is to introduce the methodology for the recognition of collateral for retail lending which is Basel II complaint. Basel II for the retail segment offers two possible approaches: the standardized approach and the Internal Ratings-Based (IRB) Approach. The...

  • BASEL II AND ITS IMPLEMENTATION. Nemšáková, Ivana // 11th International Conference on Finance & Banking: Future of th;2007, p584 

    Basel II (The New Capital Reasonability Agreement) refers to a revision of the original Capital Agreement (Basel I) that was made as a response to permanently developing complicated bank processes. Basel II is aimed to change calculation of capital requirements towards more risk sensitive...

  • Take Last Step to Implement Basel II. Grody, Allan D. // American Banker;3/20/2008, Vol. 173 Issue 55, p12 

    The author argues that the risk-culture of a particular bank offers the greatest protection against collapse, more than capital and reserve requirements. He contends that the final part of Basel II dealing with risk frameworks and still waiting to be enacted, offers the best protection against...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics