The Unintended Consequences of the Basel III Liquidity Risk Regulation

2012 ◽  
Author(s):  
Massimiliano Neri
Keyword(s):  
Liquidity Risk ◽  
Unintended Consequences ◽  
Basel Iii ◽  
Risk Regulation

scholarly journals Liquidity Risk Regulation

2014 ◽  
Vol 5 (1) ◽  
pp. 7-21 ◽  
Author(s):  
Tomáš Gongol ◽  
Pavla Vodová
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Liquidity Risk ◽  
Current Level ◽  
Basel Iii ◽  
Risk Regulation ◽  
Key Characteristics ◽  
The Global Financial Crisis ◽  
Visegrád Countries

One of the key characteristics of the global financial crisis was the inaccurate and ineffective liquidity risk management. As usual after the crisis, some thoughts about the need for more appropriate liquidity risk regulation emerged. The aim of this paper is therefore to characterize the development of liquidity risk regulation. First part of the paper characterizes reasons for liquidity risk regulation. The second section describes the liquidity risk regulation before the financial crisis. Then we focus on the current level of legislation in the Visegrad Countries and also on prepared changes which will arise from the Basel III rules

The impact of bank liquidity risk on risk-taking and bank lending: evidence from European bank

2021 ◽  
Vol 6 (2) ◽  
pp. 82-97
Author(s):  
Hongyan Liang ◽  
Zilong Liu
Keyword(s):  
Growth Rate ◽  
Risk Taking ◽  
Fixed Effects ◽  
Liquidity Risk ◽  
Bank Lending ◽  
Basel Iii ◽  
European Banks ◽  
Risk Taking Behavior ◽  
Loan Growth ◽  
The Impact

Objective – This paper uses a sample of annual observations of European banks to examine whether the liquidity risk affects a bank’s risk-taking behavior and its future loan growth. Methodology – A sample of European banks (27 member countries of the European Union plus U.K.) over the period of 2005 to 2019 are used in this study. Liquidity risk is measured by the ratio of liquid assets to total assets. Given the longitudinal nature of the data, the authors use panel regression with bank fixed effects to control for unobserved characteristics that might affect the dependent variable. Findings – The authors find that banks holding more liquid assets take less risk and show a higher subsequent loan growth rate. These results hold for both small and large banks. Novelty – To the authors’ best knowledge, this is one of the earliest studies to carefully examine the effects of liquidity risk on risk-taking behavior and loan growth rate for European banks. Our research suggests that the current Basel III requirement on liquidity ratio can decrease bank’s risking-taking behavior while not necessarily impact their future loan growth. Type of Paper: Empirical JEL Classification: G21, G01, G18. Keywords: Bank Liquidity Risk; Risk-taking Behavior; Loan Growth; Basel III

IMF Working Paper Monetary and Capital Markets Department Possible Unintended Consequences of Basel III and Solvency II

2013 ◽  
Vol 19 (2) ◽  
pp. 273-325 ◽  
Author(s):  
Ahmed Al-Darwish ◽  
Michael Hafeman ◽  
Gregorio Impavido ◽  
Malcolm Kemp ◽  
Padraic O'Malley
Keyword(s):  
Financial Institutions ◽  
Cost Of Capital ◽  
Solvency Ii ◽  
Unintended Consequences ◽  
Basel Iii ◽  
Financial Deepening ◽  
Working Paper ◽  
Capital Funding ◽  
The Stability ◽  
The Imf

AbstractThis Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.In today's financial system, complex financial institutions are connected through an opaque network of financial exposures. These connections contribute to financial deepening and greater savings allocation efficiency, but are also unstable channels of contagion. Basel III and Solvency II should improve the stability of these connections, but could have unintended consequences for cost of capital, funding patterns, interconnectedness, and risk migration.

scholarly journals Possible Unintended Consequences of Basel III and Solvency II

2011 ◽  
Author(s):  
Gregorio Impavido ◽  
Ahmed I. Al-Darwish ◽  
Michael Hafeman ◽  
Malcolm Kemp ◽  
Padraic O'Malley
Keyword(s):  
Solvency Ii ◽  
Unintended Consequences ◽  
Basel Iii
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