scholarly journals Capital Regulations and the Management of Credit Commitments during Crisis Times

2020 ◽  
Author(s):  
Paul Pelzl ◽  
Maria Teresa Valderrama
Keyword(s):  
Capital Regulations

Risk-based capital regulation revisited: evidence from the early 2000s

2015 ◽  
Vol 23 (2) ◽  
pp. 115-134 ◽  
Author(s):  
Thomas L. Hogan ◽  
Neil R. Meredith ◽  
Xuhao (Harry) Pan
Keyword(s):  
Design Methodology ◽  
Banking Regulation ◽  
Bank Performance ◽  
Capital Regulation ◽  
Data Set ◽  
Content Type ◽  
Future Performance ◽  
Capital Ratios ◽  
Using Data ◽  
Capital Regulations

Purpose – The purpose of this study is to replicate Avery and Berger’s (1991) analysis using data from 2001 through 2011. Although risk-based capital (RBC) regulation is a key component of US banking regulation, empirical evidence of the effectiveness of these regulations has been mixed. Among the first studies of RBC regulation, Avery and Berger (1991) provide evidence from data on US banks that new RBC regulations outperformed old capital regulations from 1982 through 1989. Design/methodology/approach – Using data from the Federal Reserve’s Call Reports, the authors compare banks’ capital ratios and RBC ratios to five measures of bank performance: income, standard deviation of income, non-performing loans, loan charge-offs and probability of failure. Findings – Consistent with Avery and Berger (1991), the authors find banks’ risk-weighted assets to be significant predictors of their future performance and that RBC ratios outperform regular capital ratios as predictors of risk. Originality/value – The study improves on Avery and Berger (1991) by using an updated data set from 2001 through 2011. The authors also discuss some potential limitations of this method of analysis.

scholarly journals PERAN STRATEGIS SISTEM EKONOMI ALTERNATIF BAGI PEMBANGUNAN BANGSA DAN NEGARA

2016 ◽  
Vol 16 (02) ◽  
Author(s):  
Musta'an Musta'an
Keyword(s):  
Economic Development ◽  
Human Resources ◽  
Economic System ◽  
Research Method ◽  
The Real ◽  
Strategic Role ◽  
Conventional Banks ◽  
Islamic Economic ◽  
Capital Regulations

The purpose of this study is to see how the strategic role of alternative economic system, in this case is the Islamic economic system for the development of the nation and state of Indonesia. The research method used is by using literacy study. The results obtained that the Islamic economic system as an alternative economic system has been proven with the advancement of sharia banks, although the development is slow, because constrained many things such as minimal capital, regulations that have not reached the real application, human resources, low understanding of the community, maximum, monetary tools used by the state still use interest, limited office network, and services that have not been able to meet the standards as do conventional banks. However, the Islamic economic system has helped in strengthening the economic development of the nation and the country especially when the crisis occurred in 1998 until today.

Are Risk-Based Capital Requirements Detrimental to Corporate Lending?

2018 ◽  
Author(s):  
Brunella Bruno ◽  
Giacomo Nocera ◽  
Andrea Resti
Keyword(s):  
Asset Allocation ◽  
Business Models ◽  
Capital Requirements ◽  
Financial Repression ◽  
European Banking ◽  
European Banks ◽  
Corporate Loan ◽  
Capital Regulations ◽  
Asset Allocations ◽  
The Impact

In this chapter, we summarize the main results of a recent empirical research concerning European banks. We first explore the main drivers of the differences in risk-weighted assets (RWAs) across a sample of fifty large European banking groups. We then assess the impact of RWA-based capital regulations on those banks’ asset allocations in 2008–14. We find that risk weights are affected by bank size, business models, and asset mix. We also find that the adoption of internal ratings-based (IRB) approaches is an important driver of RWAs and that national segmentations explain a significant (albeit decreasing) share of the variability in risk weights. As for the impact of internal ratings on banks’ asset allocation in 2008–14, we uncover that banks using IRB approaches more extensively have reduced more (or increased less) their corporate loan portfolio. This effect is somewhat stronger for banks located in Eurozone periphery countries during the 2010–12 sovereign crisis. We do not find evidence, however, of internal models producing a reallocation from corporate loans to government exposures, suggesting that other motives prevailed in driving banks towards sovereign bonds during the Eurozone sovereign crisis, including the so-called ‘financial repression’ channel.

scholarly journals Bank Regulation under Fire Sale Externalities

2019 ◽  
Vol 33 (6) ◽  
pp. 2554-2584 ◽  
Author(s):  
Gazi I Kara ◽  
S Mehmet Ozsoy
Keyword(s):  
Optimal Design ◽  
Web Site ◽  
Financial Stability ◽  
Competitive Equilibrium ◽  
Capital Requirements ◽  
Risky Assets ◽  
Second Best ◽  
Oxford University ◽  
Capital Regulations ◽  
Published Paper

Abstract We examine the optimal design of and interaction between capital and liquidity regulations. Banks, not internalizing fire sale externalities, overinvest in risky assets and underinvest in liquid assets in the competitive equilibrium. Capital requirements can alleviate the inefficiency, but banks respond by decreasing their liquidity ratios. When capital requirements are the only available tool, the regulator tightens them to offset banks’ lower liquidity ratios, leading to fewer risky assets and less liquidity compared with the second best. Macroprudential liquidity requirements that complement capital regulations implement the second best, improve financial stability, and allow for more investment in risky assets. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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