scholarly journals The Unintended Consequences and Challenges of the Basel III Leverage Ratio: Supplementary Leverage Ratios

2015 ◽  
Author(s):  
Marianne Ojo
Keyword(s):  
Unintended Consequences ◽  
Basel Iii ◽  
Leverage Ratio

scholarly journals Jordan Banks Financial Soundness Indicators

2016 ◽  
Vol 4 (3) ◽  
pp. 44
Author(s):  
Imad Kutum ◽  
Khaled Al-Jaberi
Keyword(s):  
Financial Crisis ◽  
Research Paper ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Financial Indicators ◽  
2008 Financial Crisis ◽  
Leverage Ratio ◽  
General Outcome ◽  
Capital Adequacy Ratio ◽  
Financial Soundness

<p><em>The aim of this research paper is to examine the Jordanian banks using financial soundness indicators. This is to establish if Jordanian banks were affected because of the 2007/2008 financial crisis and determine the underlying reasons. The research paper was conducted on 25 banks in Jordan listed in the countries securities exchange. The research methodology used consisted of examining the banks financial records in order to derive four crucial Basel III ratio such as the capital adequacy ratio, the leverage ratio, the liquidity ratio and finally the Total Provisions (As % Of Non-Performing Loans) %. The results revealed that out of the four hypotheses under examination Jordan Banks do not meet Basel financial Indicators for Capital Adequacy Ratio, Jordan Banks does not meet Basel financial Indicators for Liquidity Ratio , Jordan Banks do not meet Basel financial Indicators for Leverage Ratio and Jordan Banks do not meet Basel financial Indicators for Total Provisions (As % Of Non-Performing Loans) ratio. Only one hypothesis was accepted based on the research outcomes. The rest of the hypothesis was rejected since the average trend line did not go below the Basel III required ratio level. The general outcome of the research revealed that Jordanian banks were not affected significantly by the financial crisis.</em></p>

Credit Risk Measurement, Leverage Ratios, and Basel III

2017 ◽  
pp. 86-116
Keyword(s):  
United States ◽  
The United States ◽  
Basel Iii ◽  
Holding Companies ◽  
Leverage Ratio ◽  
Basel Committee ◽  
Legislative Changes ◽  
Credit Risk Measurement ◽  
The Impact ◽  
The U.S

The Basel III Leverage Ratio, as originally agreed upon in December 2010, has recently undergone revisions and updates – both in relation to those proposed by the Basel Committee on Banking Supervision – as well as proposals introduced in the United States. Whilst recent proposals have been introduced by the Basel Committee to improve, particularly, the denominator component of the Leverage Ratio, new requirements have been introduced in the U.S to upgrade and increase these ratios, and it is those updates which relate to the Basel III Supplementary Leverage Ratio that have primarily generated a lot of interests. This is attributed not only to concerns that many subsidiaries of US Bank Holding Companies (BHCs) will find it cumbersome to meet such requirements, but also to potential or possible increases in regulatory capital arbitrage: a phenomenon which plagued the era of the original 1988 Basel Capital Accord and which also partially provided impetus for the introduction of Basel II. This paper is aimed at providing an analysis of the recent updates which have taken place in respect of the Basel III Leverage Ratio and the Basel III Supplementary Leverage Ratio – both in respect of recent amendments introduced by the Basel Committee and proposals introduced in the United States. As well as highlighting and addressing gaps which exist in the literature relating to liquidity risks, corporate governance and information asymmetries, by way of reference to pre-dominant based dispersed ownership systems and structures, as well as concentrated ownership systems and structures, this paper will also consider the consequences – as well as the impact - which the U.S Leverage ratios could have on Basel III. There are ongoing debates in relation to revision by the Basel Committee, as well as the most recent U.S proposals to update Basel III Leverage ratios and whilst these revisions have been welcomed to a large extent, in view of the need to address Tier One capital requirements and exposure criteria, there is every likelihood, indication, as well as tendency that many global systemically important banks (GSIBS), and particularly their subsidiaries, will resort to capital arbitrage. What is likely to be the impact of the recent proposals in the U.S.? The recent U.S proposals are certainly very encouraging and should also serve as impetus for other jurisdictions to adopt a pro-active approach – particularly where existing ratios or standards appear to be inadequate. This paper also adopts the approach of evaluating the causes and consequences of the most recent updates by the Basel Committee, as well as those revisions which have taken place in the U.S, by attempting to balance the merits of the respective legislative updates and proposals. The value of adopting leverage ratios as a supplementary regulatory tool will also be illustrated by way of reference to the impact of the recent legislative changes on risk taking activities, as well as the need to also supplement capital adequacy requirements with the Basel Leverage ratios and the Basel liquidity standards.

scholarly journals Planned Solvency III Regulation: Should It Be Adopted Outside the European Union?

2019 ◽  
Vol 13 (1) ◽  
Author(s):  
Peter Zweifel
Keyword(s):  
European Union ◽  
Capital Market ◽  
Solvency Ii ◽  
Business Strategies ◽  
Basel Iii ◽  
The European Union ◽  
Leverage Ratio ◽  
Solvency Regulation ◽  
Regulatory Failure ◽  
The Capital Market

Abstract Several countries outside the European Union consider adopting its solvency regulation for their insurance industries. However, Solvency I and (to a lesser extent) Solvency II were found to run the risk of inducing more rather than less risk-taking by insurers (Zweifel, Peter. 2014. “Solvency Regulation of Insurers: A Regulatory Failure?” Journal of Insurance Issues 37 (2): 135–157.). Companies are led to neglect parameters that link them to developments in the capital market when determining their endogenous perceived efficiency frontier (EPEF), causing it to become steeper. Given homothetic risk preferences, senior management is predicted to opt for increased rather than reduced volatility. By way of contrast, if modeled after Basel III for banks, planned Solvency III will ask insurers to take developments in the capital market into account in their formulation of business strategies designed to ensure solvency (Principle 5 of Basel III). In addition, the stipulated decrease in their leverage ratio is shown to reduce the slope of the EPEF for insurers with little solvency capital. Contrary to its predecessors, Solvency III is therefore predicted to make insurers take on less risk, which argues for its for adoption beyond the European Union if properly implemented.

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

International Standards for Bank Capital Exposures to CCPs and Derivatives

2020 ◽  
pp. 126-151
Author(s):  
Lucia Quaglia
Keyword(s):  
Capital Requirements ◽  
International Standards ◽  
Basel Iii ◽  
Real Economy ◽  
Bank Capital ◽  
Financial Industry ◽  
Leverage Ratio ◽  
The Us ◽  
Credit Valuation Adjustment ◽  
The Uk

The elemental regime on bank capital for derivatives encompassed the credit valuation adjustment (CVA), the leverage ratio, and bank exposures to CCPs. Like for other parts of Basel III, the US and the UK were pace-setters internationally, promoting relatively precise, stringent, and consistent rules. The EU agreed on the need for higher capital requirements, but worried about negative implications for the provision of credit to the real economy. Networks of regulators were instrumental in furthering agreement amongst and within jurisdictions. They also fostered rules consistency through formal and informal coordination tools amongst international standard-setting bodies. The financial industry mobilized in order to reduce the precision and stringency of capital requirements, pointing out the need to consider capital reforms in conjunction with other post-crisis standards, notably, margins.

Possible unintended consequences of Basel III and Solvency II ‐ Abstract of the Edinburgh discussion

2013 ◽  
Vol 19 (2) ◽  
pp. 326-340
Author(s):  
Malcolm Kemp
Keyword(s):  
Solvency Ii ◽  
Unintended Consequences ◽  
Basel Iii ◽  
Publication Type

This abstract relates to the following paper:Al-DarwishA., HafemanM., ImpavidoG., KempM. and O'MalleyP.Possible Unintended Consequences of Basel III and Solvency II.British Actuarial Journal, doi:10.1017/S1357321713000391

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