Download or read book Basel III Liquidity Regulation and Its Implications written by Mark Petersen and published by Business Expert Press. This book was released on 2014-05-07 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: Liquidity involves the degree to which an asset can be bought or sold in the market without affecting its price. The 2007 to 2009 financial crisis was characterized by a decrease in liquidity and necessitated the introduction of Basel III capital and liquidity regulation in 2010. Inside, you’ll learn how such regulations are applied on a broad crosssection of countries in order to understand and demonstrate the implications of Basel III. This book summarizes the defining features of the Basel I, II, and III Accords and their perceived shortcomings, as well as the role of the Basel Committee on Banking Supervision (BCBS) in promulgating international banking regulation. Basel III quantifies liquidity risk by using the measures liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). This book discusses approximation techniques that may be used to estimate these liquidity measures. Inside, the authors highlight the connections between liquidity creation and bank capital and provide you with the details of an investigation of the risks liquidity creation generates for banks. In addition, we consider the impact of the implementation of Basel III liquidity regulation on macroeconomic variables such as GDP, investment, inflation, consumption, income, savings, and employment.
Download or read book Financial regulation through new liquidity standards and implications for institutional banks written by Ansgar Wittenbrink and published by GRIN Verlag. This book was released on 2011-05-18 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University of Applied Sciences Essen, course: General economics, language: English, abstract: The global financial crisis which began in mid-2007 revealed the significant risks posed by large, complex and interconnected institutions and the fault-lines in the regulatory and oversight systems. The drying up of market liquidity caused lacks of funding for financial institutions and their reactions to the market stress increased the market tensions which highlighted the strong link between banks funding liquidity and market liquidity. Over the past two decades preceding the crisis, banks in advanced countries significantly expanded in size and increased their outreach globally. In many cases, they moved away from the traditional banking model towards globally active large and complex financial institutions. The majority of cross-border finance was intermediated by some of these institutions with growing interconnections within and across borders. The result were trends in the banking industry which include a sharp rise in leverage, significant reliance on short-term funding, significant off-balance sheet activities, maturity mismatches and increased share of revenues from complex products and trading activities. This development has moved on to a systematic risk and it has been identified a need in the financial sector to measure those aspects, to assess the resilience of the financial sector to liquidity shocks and give guidance to the policy of central banks and regulators. At the same time, the financial industry has started a fast process of consolidation worldwide. Regulators, organized in the Basel Committee on Banking Supervision (BCBS) have responded to the financial crisis by proposing new regulation which is known as “Basel III”. The reform program leads to fundamental changes and implements capital and liquidity reforms. The liquidity reform represents the first attempt by international regulators to introduce harmonized liquidity minimum standards for financial institutions. Extensive efforts through the Basel Committee, with the “Basel III” program, are being considered internationally and domestically to revise these deficiencies and failures, in order to safeguard the stability of the financial system. The key objective is to promote a less leveraged, less risky, and thus a more resilient financial system that supports strong and sustainable economic growth. The bulk of the proposals have focused on revising existing regulations applicable to financial institutions and to influence the extent and consequences of their risk taking.
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 Basel 3 and its impact on liquidity measures written by Daniel Hosp and published by GRIN Verlag. This book was released on 2012-11-29 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2011 in the subject Business economics - Investment and Finance, grade: 1, University of Innsbruck (Banken und Finanzen), language: English, abstract: 1. Introduction On 6 September 2009 the Central Bank Governors and Heads of Supervision agreed on Basel III after the financial crisis proved that Basel II was not capable of preventing the global economy from such a crisis (BCBS, 2008). Basel III is the third version of the international regulatory framework for financial institutions published by the Basel Committee of Banking Supervision (BCBS) of the Bank for International Settlements (BIS) located in Basel, Switzerland (BIS, www.bis.org, 30.04.2011).... .... This bachelor thesis should provide some deeper information about the impacts of the new liquidity measures. The impact of the standards on economy, financial institutions and their business segments is presented, after a detailed explanation of them. Concluding a comprehensive evaluation of the new requirements is done. 2. Developments in Basel III 2.1. Increasing Capital Requirements 2.2. Liquidity Coverage Ratio 2.3. Net Stable Funding Ratio 2.4. Monitoring Tools and Application of Standards 3. Initial Situation of Banks Regarding Liquidity Requirements 3.1. Quantitative Impact Study of the BCBS 3.2. European Quantitative Impact Study of the CEBS 3.3. Comparison of Results 4. Economic Impacts of the New Liquidity Requirements 4.1. Benefits of the New Liquidity Requirements 4.2. Costs of the New Liquidity Requirements 4.3. Evaluation of the Results 5. Impact of the Liquidity Requirements on Banks and their Business Segments 5.1. Changed Market Conditions 5.2. Impact on the Profitability of Banks 5.3. Impact on Business Segments 5.4. Impact on Central Banks 5.5. Overall Impacts on Banks and Business Segments 6. Evaluating the Liquidity Rules of Basel III 6.1. Static Nature of the Liquidity Measures 6.2. Are Wrong Incentives the Actual Causer? 6.3. Introduction of Basel III in Various Countries 6.4. Additional Comments 7. Conclusion
Download or read book The Pro Cyclical Effects of Accounting Rules on Basel III Liquidity Regulation written by Guoxiang Song and published by . This book was released on 2015 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Basel III introduces the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) to enhance bank liquidity regulation. This paper investigates whether accounting rules have pro-cyclical effects on these liquidity requirements. By rearranging the formulae for the LCR and the NSFR, this paper develops simplified models for examining such effects. Because of the linkages among accounting rules, capital rules and liquidity ratios, recurring fair value measurements are found to have pro-cyclical effects on both the LCR and the NSFR whereas the provision for loan losses is found to have positive effects on the NSFR although it has little impact on the LCR. The expected loss (EL) model for loan loss provisioning will introduce a new pro-cyclical impact on the NSFR even though it will lessen the pro-cyclical impact of the incurred-loss impairment model on the leverage ratio. Therefore, the contribution of accounting rules to the pro-cyclicality in the regulatory system will be enhanced as the paper also finds that the Basel III liquidity rules and the Basel III capital rules will reinforce each other's pro-cyclicality.
Download or read book Basel III and Bank Lending Evidence from the United States and Europe written by Mr.Sami Ben Naceur and published by International Monetary Fund. This book was released on 2017-11-15 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data on commercial banks in the United States and Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank-lending following the 2008 financial crisis. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.
Download or read book Status of the Basel III Capital Adequacy Accord written by Walter W. Eubanks and published by DIANE Publishing. This book was released on 2010 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: The new Basel Capital Adequacy Accord (Basel III) is an agreement among countries' central banks and bank supervisory authorities on the amount of capital banks must hold as a cushion against losses and insolvency. Basel III is of concern to Congress mainly because it could put U.S. financial institutions at a competitive disadvantage in world financial markets. This report follows the basic elements of the Basel III documents on the types of capital requirements and their phase-in schedule, which were approved by the Basel member central bank governors on September 12, 2010. The elements are the new definition of Tier 1 capital, the minimum common equity capital, the capital conservation buffer, countercyclical capital buffer, liquidity coverage ratio, global leverage ratio, and wind-down government capital injections. The report concludes with some implications drawn from its content.
Download or read book Does Going Tough on Banks Make the Going Get Tough Bank Liquidity Regulations Capital Requirements and Sectoral Activity written by Ms.Deniz O Igan and published by International Monetary Fund. This book was released on 2020-06-19 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whether and to what extent tougher bank regulation weighs on economic growth is an open empirical question. Using data from 28 manufacturing industries in 50 countries, we explore the extent to which cross-country differences in bank liquidity and capital levels were related to differences in sectoral activity around the period of the global financial crisis. We find that industries which are more dependent on external finance, in countries where banks had higher liquidity and capital ratios, performed relatively better during the crisis, with regard to investment rates and the creation of new enterprises. This relationship, however, exists only for bank-based systems and emerging market economies. In the pre-crisis period, we find only a marginal link to bank capital. These findings survive a battery of robustness checks and provide some solid support for the tighter prudential measures introduced under Basel III.
Download or read book Financial Regulation Through New Liquidity Standards and Implications for Institutional Banks written by Ansgar Wittenbrink and published by GRIN Verlag. This book was released on 2011-05 with total page 93 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University of Applied Sciences Essen, course: General economics, language: English, abstract: The global financial crisis which began in mid-2007 revealed the significant risks posed by large, complex and interconnected institutions and the fault-lines in the regulatory and oversight systems. The drying up of market liquidity caused lacks of funding for financial institutions and their reactions to the market stress increased the market tensions which highlighted the strong link between banks funding liquidity and market liquidity. Over the past two decades preceding the crisis, banks in advanced countries significantly expanded in size and increased their outreach globally. In many cases, they moved away from the traditional banking model towards globally active large and complex financial institutions. The majority of cross-border finance was intermediated by some of these institutions with growing interconnections within and across borders. The result were trends in the banking industry which include a sharp rise in leverage, significant reliance on short-term funding, significant off-balance sheet activities, maturity mismatches and increased share of revenues from complex products and trading activities. This development has moved on to a systematic risk and it has been identified a need in the financial sector to measure those aspects, to assess the resilience of the financial sector to liquidity shocks and give guidance to the policy of central banks and regulators. At the same time, the financial industry has started a fast process of consolidation worldwide. Regulators, organized in the Basel Committee on Banking Supervision (BCBS) have responded to the financial crisis by proposing new regulation which is known as "Basel III". The reform program leads to fundamental changes and implements capital and liquidity reforms. The liquidity re
Download or read book Implications from regulatory changes on the Swiss banking sector written by Stefan Stotz and published by GRIN Verlag. This book was released on 2016-04-18 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 5, Prifysgol Cymru University of Wales, course: MBA International Finance, language: English, abstract: Basel III has already had a major impact on the global finance sector. In this report I have analyzed the impact on the swiss banks, in particular the system relevant banks. In response to the latest global financial crisis, a number of regulatory policies such as Anti-Money Laundering (AML) and stringent compliance were adopted over the past years but the finance sector called for an international standard, a global regulation. The planned implementation of Basel Accords by January 1, 2019 focuses on much higher capital requirements as well as increased liquidity and funding requirements at the same time. The core goal of Basel III is to make sure that government will never have to bail out banks again as they did in many cases over the past years. This objective of this thesis is to analyze and describe the Basel III framework and focus on its implications on the banking industry, with a focus on the Swiss Banking Sector. The main challenges ahead for the banking sector due to the extensive regulatory changes are to review the profitability of their business models as intensification of compliance will bring pressure on bank’s profit margins. The report will describe how financial institutions will also have to review funding strategies and also deal with the impact of increased capital and liquidity costs. Further will the technical compliance with the new rules and required key ratios be a significant challenge in itself. This thesis will present the beginning of today’s regulatory set of regulations which began in July 1988 known as the Basel I Accord and explain the different intermediate stages until the newest regulatory framework: Basel III. The Basel III Accord will be gradually implemented over a transition period from 2013 - 2018. Further to analyzing the impact of the new Accord on the financial system and Switzerland in particular, this thesis will also review the sufficiency of different key ratios that have to be achieved by the Banks in order to meet the regulators standards and will provide key findings and suggestions for improvement for the body of rules to be more efficient and meaningful. The latest official financial statements by the Banks suggest that the system-relevant banks are well on the way of not only meeting the required standards but also to find alternatives to maintain current profitability. [...]
Download or read book The Impact of the Basel III Liquidity Regulations on the Bank Lending Channel written by Gaston Giordana and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Changing Fortunes of Central Banking written by Philipp Hartmann and published by Cambridge University Press. This book was released on 2018-03-29 with total page 423 pages. Available in PDF, EPUB and Kindle. Book excerpt: 22.3.1 Basic Characteristics
Download or read book Bank Liquidity and the Global Financial Crisis written by Laura Chiaramonte and published by Springer. This book was released on 2018-07-09 with total page 213 pages. Available in PDF, EPUB and Kindle. Book excerpt: One of the lessons learned from the Global Financial Crisis of 2007–9 is that minimum capital requirements are a necessary but inadequate safeguard for the stability of an intermediary. Despite the high levels of capitalization of many banks before the crisis, they too experienced serious difficulties due to insufficient liquidity buffers. Thus, for the first time, after the GFC regulators realized that liquidity risk can jeopardize the orderly functioning of a bank and, in some cases, its survival. Previously, the risk did not receive the same attention by regulators at the international level as other types of risk including credit, market, and operational risks. The GFC promoted liquidity risk to a significant place in regulatory reform, introducing uniform international rules and best practices. The literature has studied the potential effects of the new liquidity rules on the behaviour of banks, the financial system, and the economy as a whole. This book provides a comprehensive understanding of the bank liquidity crisis that occurred during the GFC, of the liquidity regulatory reform introduced by the Basel Committee with the Basel III Accord, and its implications both at the micro and macroeconomic levels. Università Cattolica del Sacro Cuore contributed to the funding of this research project and its publication.
Download or read book Banks Adjustment to Basel III Reform written by Michal Andrle and published by International Monetary Fund. This book was released on 2017-02-20 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper seeks to identify strategies of commercial banks in response to higher capital requirements of Basel III reform and its phase-in. It focuses on a sample of nine EU emerging market countries and picks up 5 largest banks in each country assessing their response. The paper finds that all banking sectors raised CAR ratios mainly through retained earnings. In countries where the banking sector struggled with profitability, banks have resorted to issuance of new equity or shrunk the size of their balance sheets to meet the higher capital-adequacy requirements. Worries echoed at the early stage of Basel III compilation, namely that commercial banks would shrink their balance sheet by reducing their lending to meet stricter capital requirements, did materialize only in banks struggling with profitability.
Download or read book Impact of Basel III on Public and Private Sector Banks written by Charu Watts and published by . This book was released on 2023-06-06 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The implementation of Basel III regulations has had a significant impact on the banking industry worldwide. This description focuses on the effects of Basel III implementation in the banking industry, specifically through a comparative study of selected public and private sector banks. Basel III, developed by the Basel Committee on Banking Supervision, aims to strengthen the global banking system by introducing stricter capital adequacy, liquidity, and risk management requirements. The comparative study explores how these regulations have influenced both public and private sector banks. The effects of Basel III implementation on banks can be observed in various areas. Firstly, capital adequacy requirements have compelled banks to maintain higher capital reserves, ensuring they have a sufficient cushion to absorb potential losses. This has led to changes in banks' capital structures and strategies, affecting their lending capacity and profitability. Secondly, Basel III's liquidity regulations, such as the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), have emphasized the importance of maintaining sufficient liquidity buffers. Banks have had to adopt strategies to manage their liquidity positions effectively, ensuring they can withstand periods of financial stress. Additionally, Basel III's enhanced risk management requirements have prompted banks to improve their risk assessment frameworks and strengthen internal controls. Banks have focused on better risk measurement, monitoring, and mitigation practices, resulting in a more resilient banking system. The comparative study explores how the effects of Basel III implementation differ between public and private sector banks. Factors such as governance structures, capital resources, risk appetite, and market competitiveness may influence how banks in each sector adapt to the new regulations. Overall, the implementation of Basel III regulations has brought about significant changes in the banking industry. While it has increased the resilience and stability of banks, it has also posed challenges for profitability, lending practices, and liquidity management. The comparative study of selected public and private sector banks provides valuable insights into how different banking institutions have responded to and navigated these regulatory changes. By understanding these effects, policymakers and industry stakeholders can make informed decisions and further strengthen the global banking system.
Download or read book Liquidity Risk Management in Banks written by Roberto Ruozi and published by Springer Science & Business Media. This book was released on 2012-09-20 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent turmoil on financial markets has made evident the importance of efficient liquidity risk management for the stability of banks. The measurement and management of liquidity risk must take into account economic factors such as the impact area, the timeframe of the analysis, the origin and the economic scenario in which the risk becomes manifest. Basel III, among other things, has introduced harmonized international minimum requirements and has developed global liquidity standards and supervisory monitoring procedures. The short book analyses the economic impact of the new regulation on profitability, on assets composition and business mix, on liabilities structure and replacement effects on banking and financial products.
Download or read book The Effects of Liquidity Regulation on Bank Assets and Liabilities written by Patty Duijm and published by . This book was released on 2017 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under Basel III rules, banks became subject to a liquidity coverage ratio (LCR) from 2015 onward, to promote short-term resilience. Investigating the effects of such liquidity regulation on bank balance sheets, we find (i) cointegration of liquid assets and liabilities, to maintain a short-term liquidity buffer; and (ii) that adjustment in the liquidity ratio is skewed towards the liability side. This finding contrasts with established wisdom that compliance with the LCR is mainly driven by changes in liquid assets. Moreover, microprudential regulation has not prevented a procyclical liquidity cycle in secured financing that is strongly correlated with leverage.
