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We explore and summarize the evolution in bank capital regulations and bank risk after the global financial crisis. Using a new survey of bank regulation and supervision covering more than 120 economies , we show that regulatory capital increased, but some elements of capital regulations became laxer. Analyzing bank-
Financial crises are almost always followed by regulatory reform. The tenth anniversary of the GFC provides an opportunity to reflect on these reforms. New Data – World Bank –Bank Regulation and Supervision Survey – cover 160 countries. Opportunity to assess regulatory reform in developing countries.
- G-SIB Assessment Methodology and Capital Surcharges
- Bank Resilience: Trends and Drivers
- Systemic Importance Through The G-SIB Framework's Lens
- Conclusion
- References
First published by the Basel Committee on Banking Supervision (BCBS) in 2011, the G-SIB framework is designed to reduce G-SIBs' probability of failure (BCBS (2018)). To that end, it sets out a methodology to identify G-SIBs, and defines capital surcharges that increase in step with a bank's approximated systemic importance. While this feature focus...
Assessing how banks' resilience has evolved in recent years must take account of some opposing forces. On the one hand, the capital ratios of both G- SIBs and non-G-SIBs have trended up (Graph 1, first panel), suggesting a substantial improvement in resilience. On the other hand, profitability has yet to recover for many G-SIBs (Graph 1, second pan...
Having established that G-SIBs have become more resilient, we now ask how their systemic importance has evolved. To do so, we rely on the evolution of the G-SIB scores for several reasons. First, the scores are designed to capture many dimensions of banks' systemic footprint, based on the lessons drawn from the GFC and other crises. Second, since t...
This special feature finds that G-SIBs have become more resilient in recent years, thanks to a build-up in capital buffers and a shift to more stable sources of funding. Weak profitability, however, has hindered further improvements. G-SIBs' systemic importance, as approximated by the BCBS assessment methodology, has declined on average over this p...
Acemoğlu, D, A Özdağlar and A Tahbaz-Salehi (2015): "Systemic risk and stability in financial networks", American Economic Review, vol 105, no 2, pp 564-608. Adrian, T, J Kiff and H S Shin (2018): "Liquidity, leverage, and regulation 10 years after the Global Financial Crisis", Annual Review of Financial Economics, vol 10, November, pp 1-24. Aldaso...
- Tirupam Goel, Ulf Lewrick, Ulf Lewrick, Aakriti Mathur
- 2019
Nov 27, 2020 · Just after the adapted Basel Accord was being implemented, the Asian financial crisis of 1997 showed the vulnerability of the international economy to cross-border bank loans and exchange risk, and the capital adequacy targets were adapted to include market risks, such as foreign exchange markets.
- Catherine R Schenk
- 2021
The paper explores and summarizes the evolution in bank capital regulations, capitalization of banks, market discipline, and supervisory power since the global financial crisis. It shows that regulatory capital increased, but some elements of capital regulations became laxer.
Jul 31, 2024 · Using contemporaneous data for 40 countries, we show that institutional mechanisms, investor protection, bank regulation and supervision (BRS) rules, and ownership, reduced bank risk-taking around the Global Financial Crisis (GFC) and the Eurozone Crisis/Sovereign Debt Crisis periods.
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How has banking capital changed since the global financial crisis?
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How did regulatory capital change after the financial crisis?
How do post-crisis reforms affect global systemically important banks (G-SIBs)?
Chapter 3 discusses how conflicts of interest between bank managers, shareholders, and debt holders can lead to excessive bank risk taking from society’s point of view. It finds that banks with boards of directors independent from management take less risk.
