Catalogue Search | MBRL
Are you sure you want to remove the book from the shelf?
{{itemTitle}}
353,081
result(s) for
"Bank capital"
Sort by:
The Real Effects of Bank Capital Requirements
We measure the impact of bank capital requirements on corporate borrowing, investment, and employment using loan-level data. The Basel II regulatory framework makes capital requirements vary across both banks and firms, which allows us to control for time-varying firm-level risk and bank-level credit supply shocks. We find that a 1 percentage point increase in capital requirements reduces lending by 2.3%–4.5%. Firms can attenuate this reduction by substituting borrowing across banks, but only to a limited extent. The resulting reduction in borrowing capacity affects significantly both investment and employment: for firms whose effective capital requirements increase by 1 percentage point, fixed assets are reduced by 1.1%, capital expenditures by 2.7%, and employment by 0.8%.
This paper was accepted by Tomasz Piskorski, finance.
Journal Article
The Need for \Un-consolidating\ Consolidated Banks' Stress Tests
The recent crisis has spurred the use of stress tests as a (crisis) management and early warning tool. However, a weakness is that they omit potential risks embedded in the banking groups' geographical structures by assuming that capital and liquidity are available wherever they are needed within the group. This assumption neglects the fact that regulations differ across countries (e.g., minimum capital requirements), and, more importantly, that home/host regulators might limit flows of capital or liquidity within a group during periods of stress. This study presents a framework on how to integrate this risk element into stress tests, and provides illustrative calculations on the size of the potential adjustments needed in the presence of some limits on intragroup flows for banks included in the June 2011 EBA stress tests.
eBook
Engineering the Financial Crisis
The financial crisis has been blamed on reckless bankers, irrational exuberance, government support of mortgages for the poor, financial deregulation, and expansionary monetary policy. Specialists in banking, however, tell a story with less emotional resonance but a better correspondence to the evidence: the crisis was sparked by the international regulatory accords on bank capital levels, the Basel Accords.
In one of the first studies critically to examine the Basel Accords,Engineering the Financial Crisisreveals the crucial role that bank capital requirements and other government regulations played in the recent financial crisis. Jeffrey Friedman and Wladimir Kraus argue that by encouraging banks to invest in highly rated mortgage-backed bonds, the Basel Accords created an overconcentration of risk in the banking industry. In addition, accounting regulations required banks to reduce lending if the temporary market value of these bonds declined, as they did in 2007 and 2008 during the panic over subprime mortgage defaults.
The book begins by assessing leading theories about the crisis-deregulation, bank compensation practices, excessive leverage, \"too big to fail,\" and Fannie Mae and Freddie Mac-and, through careful evidentiary scrutiny, debunks much of the conventional wisdom about what went wrong. It then discusses the Basel Accords and how they contributed to systemic risk. Finally, it presents an analysis of social-science expertise and the fallibility of economists and regulators. Engagingly written, theoretically inventive, yet empirically grounded,Engineering the Financial Crisisis a timely examination of the unintended-and sometimes disastrous-effects of regulation on complex economies.
eBook
Bank stability and economic growth in Sub-Saharan Africa: trade-offs or opportunities? And how do institutions and bank capital affect this trade-off?
There are concerns that while stringent capital policy may enhance banks' resilience, it may also have other unintended economic repercussions. This study contributes to this debate by investigating whether regulatory bank capital induces a trade-off between bank stability and economic growth and whether institutional quality affects this trade-off. The study tested the model empirically with data from 71 banks in 9 Sub-Saharan African (SSA) countries from 2007 to 2021, using several estimators such as the system generalised methods of moments (SGMM), fixed effects (FE), two-stage least square (2SLS) and the Bayesian methods. This study discovers that regulatory capital can maintain bank stability and economic growth, as opposed to the concern that higher regulatory capital poses economic problems. This indicates no support for a capital-induced trade-off between bank stability and economic growth, but rather opportunities. Further, while institutional quality alone does not directly impact this link, it enhances the positive effects of regulatory capital on economic growth. The findings suggest the need for governments to ensure strong institutional and capital policies to achieve economic growth. This study has explored the intricate relationship among banking sector activities, institutional mechanisms, and the economy. The trade-off model is novel in the SSA literature, providing deeper insights into integrating selective Basel III into institutional strategies to achieve bank stability and economic growth. By investigating whether high regulatory bank capital induces a trade-off between bank stability and economic growth, and the impact of institutional quality and bank capital on the relationship between bank stability/capital and economics in Sub-Saharan Africa, the study offers insights that high regulatory capital can promote bank stability and economic growth simultaneously. This addresses concerns that banks constrain credit to meet regulatory capital requirements, undermining economic growth. The findings, however, suggest that regulatory capital improves stability, allowing banks to finance the economy. In addition, by establishing that the positive impact of bank stability on economic growth is stronger at higher levels of bank capital and institutional quality, this study offers bank management, policymakers, governments and financial regulators insights to supervise effective capital regulations and enhance the poor institutional environment in SSA. This guidance is critical for promoting institutional reforms, cooperative capital regulation and strong financial supervisory oversight.
Journal Article
Banking and Effective Capital Regulation in Practice
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, highlighted 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 undergraduates, master’s and PhD students, academics, and researchers can use to gain a deeper understanding of the constructs at play in the banking industry.
eBook