Download or read book Bank Capital Regulation and Risk Taking written by Michael Wedow and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banking is one of the most regulated industries. The arguments for an extensive regulation of the banking industry are rooted in the importance of banks in financing economic development and the economic costs associated with financial instability in the banking system. In order to design an adequate regulatory framework that ensures financial stability it is decisive to understand the impact of regulation on banks' risk taking. As a starting point, I review the literature on the various instruments of bank regulation with a particular focus on capital regulation. In chapter 3, I provide the reader with a description of the banking system and the regulatory framework in Germany. Chapter 4 examines the role of banks' capitalization for their lending supply. I find that weak capitalization of banks did not slow down lending supply. In chapter 5, I analyze the impact of minimum capital requirements under Basel 2 on bank lending to emerging markets. The results confirm that bank lending will not be subject to dramatic shifts due to a reform in capital regulation.
Download or read book Bank Capital and Risk Taking written by Stéphanie M. Stolz and published by Springer Science & Business Media. This book was released on 2007-10-24 with total page 163 pages. Available in PDF, EPUB and Kindle. Book excerpt: The year-long consultations on Basel II mirror the international popularity of capital requirements as a regulatory instrument. Yet, the impact of capital requirements on banks' behavior is not fully understood. The aim of this study is to contribute to this understanding.
Download or read book Does Capital Regulation Affect Bank Risk taking written by Frederick T. Furlong and published by . This book was released on 1987 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Global Financial Development Report 2019 2020 written by World Bank and published by World Bank Publications. This book was released on 2019-11-22 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over a decade has passed since the collapse of the U.S. investment bank, Lehman Brothers, marked the onset of the largest global economic crisis since the Great Depression. The crisis revealed major shortcomings in market discipline, regulation and supervision, and reopened important policy debates on financial regulation. Since the onset of the crisis, emphasis has been placed on better regulation of banking systems and on enhancing the tools available to supervisory agencies to oversee banks and intervene speedily in case of distress. Drawing on ten years of data and analysis, Global Financial Development Report 2019/2020 provides evidence on the regulatory remedies adopted to prevent future financial troubles, and sheds light on important policy concerns. To what extent are regulatory reforms designed with high-income countries in mind appropriate for developing countries? What has been the impact of reforms on market discipline and bank capital? How should countries balance the political and social demands for a safety net for users of the financial system with potentially severe moral hazard consequences? Are higher capital requirements damaging to the flow of credit? How should capital regulation be designed to improve stability and access? The report provides a synthesis of what we know, as well as areas where more evidence is still needed. Global Financial Development Report 2019/2020 is the fifth in a World Bank series. The accompanying website tracks financial systems in more than 200 economies before, during, and after the global financial crisis (http://www.worldbank.org/en/publication/gfdr) and provides information on how banking systems are regulated and supervised around the world (http://www.worldbank.org/en/research/brief/BRSS).
Download or read book The Relationship Between Bank Capital Risk taking and Capital Regulation written by Stéphanie Stolz and published by . This book was released on 2002 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Capital based Regulation on Bank Risk taking written by Paul S. Calem and published by . This book was released on 1996 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Risk Based Capital written by Lawrence D. Cluff and published by DIANE Publishing. This book was released on 2000 with total page 187 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Bank Capital Regulation and Incentives for Risk Taking written by Alistair Milne and published by . This book was released on 2019 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyse the incentive impact of bank capital regulation in a model with endogenous capital, assuming regulators randomly audit banks and require undercapitalised banks either to bear the fixed cost of new issue or to liquidate. Forward looking banks with sufficient franchise value maintain a buffer of capital in excess of the regulatory minimum. In our dynamic setting we show, amongst other results: that incentives for risk taking depend upon this buffer of free capital, not the total level; and that the regulatory capital requirement has no long run effect on bank risk-taking.
Download or read book Banking and Effective Capital Regulation in Practice written by Sophia Velez and published by Routledge. This book was released on 2020-11-18 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt: Due to a historical lack of attention to the importance of modelling, measuring and managing risk, senior bank leaders are struggling to implement unified practices within their financial institutions that could address the gaps posed by risky management behaviour, rogue trading, liquidity crises, prohibited investments in mortgage-backed securities, and default risks aligned with loans. This book discusses the theories at play between bank agents (bank managers) and their principals (shareholders), a topic which has gained importance as a result of the banking crisis, and similarly, governed the need for more efficient risk management and ethical managerial practices. The author worked with a senior bank leadership team to identify and describe effective capital regulation practices that can lead to a reduction in loss and risky management behavioural practices. The book offers consensus on a number of activities that bank managers can implement to address bank risk. It analyses the relevant factors that determine the necessity for banking regulation and the important role of regulation in managing banking crises. The author’s analysis of the important regulatory aspects in developed countries such as the US, offers a useful conceptual framework for creating an adequate banking regulatory environment in developing countries. This book offers an original contribution to the field of banking that undergraduate, masters, PhD students, academics and researchers can use to gain a deeper understanding of the constructs at play in the banking industry.
Download or read book Monetary Policy Leverage and Bank Risk Taking written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2010-12-01 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a theoretical foundation for the claim that prolonged periods of easy monetary conditions increase bank risk taking. The net effect of a monetary policy change on bank monitoring (an inverse measure of risk taking) depends on the balance of three forces: interest rate pass-through, risk shifting, and leverage. When banks can adjust their capital structures, a monetary easing leads to greater leverage and lower monitoring. However, if a bank's capital structure is fixed, the balance depends on the degree of bank capitalization: when facing a policy rate cut, well capitalized banks decrease monitoring, while highly levered banks increase it. Further, the balance of these effects depends on the structure and contestability of the banking industry, and is therefore likely to vary across countries and over time.
Download or read book The Effect of Stricter Capital Regulation on Banks Risk Taking written by Frederik Lundtofte and published by . This book was released on 2018 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: A simple portfolio choice model shows that, when a bank's capital is constrained by regulation, regulatory cost (risk weightings) alters the risk and value calculations for the bank's assets. In particular, we find that banks may respond to stricter regulation by increasing the share of high-risk assets. Our empirical results show that U.S. banks responded to the implementation of the stricter Basel II regulations by increasing the share of high-risk assets in the risky part of their portfolios.
Download or read book Bank Leverage and Monetary Policy s Risk Taking Channel written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2013-06-06 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.
Download or read book Bank Capital and Incentives for Risk Taking written by Alistair Milne and published by . This book was released on 2019 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyse the incentive impact of bank capital regulation in a model with endogenous capital, assuming regulators randomly audit banks and require undercapitalised banks either to bear the fixed cost of new issue or to liquidate. Forward looking banks with sufficient franchise value maintain a buffer of capital in excess of the regulatory minimum. In our dynamic setting we show, amongst other results: that incentives for risk taking depend upon this buffer of free capital, not the total level; and that the regulatory capital requirement has no long run effect on bank risk-taking.
Download or read book Bank Profitability and Risk Taking written by Natalya Martynova and published by International Monetary Fund. This book was released on 2015-11-25 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditional theory suggests that more profitable banks should have lower risk-taking incentives. Then why did many profitable banks choose to invest in untested financial instruments before the crisis, realizing significant losses? We attempt to reconcile theory and evidence. In our setup, banks are endowed with a fixed core business. They take risk by levering up to engage in risky ‘side activities’(such as market-based investments) alongside the core business. A more profitable core business allows a bank to borrow more and take side risks on a larger scale, offsetting lower incentives to take risk of given size. Consequently, more profitable banks may have higher risk-taking incentives. The framework is consistent with cross-sectional patterns of bank risk-taking in the run up to the recent financial crisis.
Download or read book Capital Requirements Market Power and Risk taking in Banking written by Rafael Repullo and published by . This book was released on 2003 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Dynamics of Capital Regulation and U S Banks Risk Taking written by Letizia Conversano and published by . This book was released on 2016 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: We outline a variety of hypotheses regarding bank risk-taking behavior in a transition period prior to the implementation of new more stringent capital adequacy and business line restrictions. In one view, developed in the paper, there is an incentive for increased risk-taking in the transition period despite the naïve hypothesis that banks will act as regulators intend for a future period. Important factors include the maturity of assets in the business line, the costs of adjustment, and the nature of the uncertainty about characteristics of the impending regulations. We examine empirical evidence to determine which hypotheses on risk shifting are observable in the run-up to implementation of Dodd-Frank and related rules. We find evidence of differential risk-taking driven by future more stringent capital regulation, some TBTF effects, and a role for TARP and other various characteristics of the banks in the pre-transition period. Naïve hypotheses of compliance, the null hypothesis of no shifts, and Regression to the Mean are rejected.
