6+

To a question about the price of possible errors regulatory capital of banks

Send me via email

Authors


PhD, associate professor of the department "Finance and credit"
Russia, Financial University under the Government of the Russian Federation
[email protected]

Abstract

The end of the financial crisis was followed by a number of studies analyzing its possible reasons. Among all those American scholars the most notable group of economists is the one that despite of the multitude of opinions blaming the vicious financial system deregulation and greedy bankers for such a disaster see the drawbacks of the financial regulation as the main cause. In particular, such drawbacks include the requirements to bank capital, both international (the Basel Committee) and national. 
This article aims at showing the way the strengthened requirements to capital for commercial banks, observed at international and national levels, fail to manage risks and can even cause them. The comparative analysis of the negotiated agreements (from Basel I to Basel III) as well as the analysis of the USA bank capital assessment rules make us come to a conclusion that undeliberate mistakes in regulation practice can result in great consequences, such as systemic financial crises. 

Keywords

Basel Accords on the capital, approaches to the risk assessment, procyclicality effect, market discipline, moral hazard, market failure, asymmetric information on financial markets.

Print Friendly, PDF & Email

Categories of article:

Read also

Suggested citation

Judina Irina Nikolaevna
To a question about the price of possible errors regulatory capital of banks// Modern Management Technology. ISSN 2226-9339. – #11 (59). Art. # 5908. Date issued: . Available at: https://sovman.ru/en/article/5908/

Full article text is available only in Russian.
Please select from the menu Russian language and continue reading.


References

  1. Markovskaja E. I. The Evolution of the Standards of Assessment of Capital Adequacy in the Adaptation of the Banking System to the Cyclic Development of Economy [Jevoljucija standartov ocenki dostatochnosti kapitala v obespechenii adaptacii bankovskoj sistemy k uslovijam ciklicheskogo  razvitija jekonomiki]. Izvestia, Herzen University Journal of Humanities and Sciences, No. 131. 2011. pp. 43-54.
  2. Matovnikov M.Ju. Innovations in Regulation. Are They Unfavorable or Beneficial [Novacii v regulirovanii. zlo ili blago]. Money and Credit journal. 2012. No. 5. pp. 30-34.
  3. Moiseev S.R. The Effect of Basel III on the Banking Sector of Russia. New Bank Capital Requirements [Vlijanie « Bazelja III» na bankovskij sektor Rossii: novye trebovanija k kapitalu bankov]. Gaidar Institute for Economic Policy. Gaidar Readings. Financial Sector in the Post-crisis Economy subpanel. M. October 13, 2010.
  4. Simanovskij A.Ju. Prospects for banking regulation, some aspects [Perspektivy bankovskogo regulirovanija, otdel’nye aspekty]. №7. 2009. pp. 23-25.
  5. Amato J. and Furfine C. Are credit ratings procyclical? Journal of Banking and Finance. 2004. № 28: рр. 2641–2677.
  6. Basel Committee on Banking Supervision (BCBS). «International Convergence of Capital Measurement and Capital Standards» (Basel I). Basel: Bank for International Settlements, 1988. July.
  7. Basel Committee on Banking Supervision. «International Convergence of Capital Measurement and Capital Standards A Revised Framework». Basel: Bank for International Settlements and Basle Committee on Banking Supervision Publications. 2004.
  8. Benink, H., Dan´ıelsson, J. and Jo´nsson, A. On the role of regulatory banking capital. Financial Markets, Institutions and Instruments. 2008. №17(1): 85–96.
  9. Brereton, Natasha. Data Show Big Exposure for Banks in Euro Zone. Wall Street Journal. 2010. June 14.
  10. Evans, Anthony, and Jeffrey Friedman. Search vs. Browse: A Theory of Error Grounded in Radical (Not Rational) Ignorance. Critical Review 23 (1–2). 2011.
  11. FDIC (Federal Deposit Insurance Corporation). 1984. The First Fifty Years: A History of the FDIC, 1933–1983. Washington, D.C.: FDIC.
  12. Stiglitz, Joseph E . The Non-Existent Hand. London Review of Books, 2010. April 22: 17–18.
  13. Stiglitz, Joseph E. Freefall: America, Free Markets, and the Sinking of the World Economy. New York: Norton. 2010.
  14. Winston, Clifford. Government Failure vs. Market Failure. Washington, D.C.: AEI Brookings Joint Center for Regulatory Studies. 2006.