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The Consultative paper issued by the Basel Committee on Banking Supervision (Basel II) cites the failure of bankers to adequately stress test exposures as a major reason for bad loans. Sample quotes from this crucial document: * ""Banks should take into consideration potential future changes in economic conditions when assessing individual credits and their credit portfolios, and should assess their credit risk exposures under stressful conditions."" * ""The recent disturbances in Asia and Russia illustrate how close linkages among emerging markets under stress conditions and previously

Risk assessment --- Risk management --- Bank capital --- 332.109 --- Capital --- Insurance --- Management --- Analysis, Risk --- Assessment, Risk --- Risk analysis --- Risk evaluation --- Evaluation --- Financial risk management. --- Risk management.

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The global financial crisis produced an important agreement among regulators in 2010'11 to raise capital requirements for banks to protect them from insolvency in the event of another emergency. In this book, William R. Cline, a leading expert on the global financial system, employs sophisticated economic models to analyze whether these reforms, embodied in the Third Basel Accord, have gone far enough. He calculates how much higher bank capital reduces the risk of banking crises, providing a benefit to the economy. On the cost side, he estimates how much higher capital requirements raise the lending rate facing firms, reducing investment in plant and equipment and thus reducing output in the economy. Applying a plausible range of parameters, Cline arrives at estimates for the optimal level of equity capital relative to total bank assets. This study also challenges the recent "too much finance" literature, which holds that in advanced countries banking sectors are already too large and are curbing growth.

Bank capital. --- Asset requirements. --- Banks and banking. --- Bank failures --- Financial crises --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Crises --- Failure of banks --- Business failures --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Capital asset requirements --- Financial responsibility requirements --- Minimum asset requirements --- Requirements, Asset --- Assets (Accounting) --- Capital --- Prevention. --- Bank capital --- Asset requirements --- Banks and banking --- Prevention --- E-books --- Private finance

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The global financial crisis underscored the importance of regulation and supervision to a well-functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enchances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the (Simar and Wilson 2007) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency.

Bank capital -- Law and legislation. --- Bank capital -- Standards. --- Banks and banking -- State supervision. --- Finance --- Business & Economics --- Banking --- Banks and Banking --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- Financial Institutions and Services: Government Policy and Regulation --- General Financial Markets: General (includes Measurement and Data) --- Financial services law & regulation --- Basel Core Principles --- Bank regulation --- Emerging and frontier financial markets --- Bank supervision --- Financial regulation and supervision --- Financial markets --- Commercial banks --- Financial institutions --- Banks and banking --- State supervision --- Financial services industry --- United States

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The existence of financial intermediaries is arguably an artifact of information asymmetry. Beyond simple financial transactions, financial intermediation provides a mechanism for information transmission, which can reduce the degree of information asymmetry and consequently increase market efficiency. During the process of information transmission, the bank is able to provide unique services in the production and exchange of information. Therefore, banks have comparative advantages in information production, transmission, and utilisation. This book provides an overview of commercial banking and includes empirical methods in banking such risk and bank performance, capital regulation, bank competition and foreign bank entry, bank regulation on bank performance, and capital adequacy and deposit insurance.

deposit insurance --- capital adequacy --- bank risk --- foreign bank entry --- bank competition --- H-statistics --- pooled regression --- dynamic panel models --- risk-taking behavior --- banks --- efficiency --- data envelopment analysis --- Asia-Pacific --- regulations --- bank capital --- meta-analysis --- Bayesian model-averaging --- capital regulation --- competition --- Indian banking sector --- panel data --- revenue diversification --- bank risks --- bank performance --- net interest income --- non-interest income --- risks --- capital

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The paper finds that, given New Zealand’s conservative approach in implementing the Basel II framework, New Zealand banks’ headline capital ratios underestimate their capital strength. A comparison with Canadian, UK and Australian banks highlights the impact of New Zealand’s more conservative approach. Stress tests in the paper show that four large New Zealand banks could withstand sizable stand-alone shocks to their exposure to either residential mortgages (calibrated on the Irish crisis experience) or corporate lending. However, combined shocks to both residential mortgages and corporate lending would put more pressure on the banks’ capital. Given high bank concentration and large offshore wholesale funding needs, the merits of higher minimum capital requirements for systemically important domestic banks could be considered, together with other measures to be implemented.

Banks and banking --- Bank capital --- Capital --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- E-books --- Banks and Banking --- Finance: General --- Industries: Financial Services --- Financial Institutions and Services: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- General Financial Markets: Government Policy and Regulation --- Financial services law & regulation --- Capital adequacy requirements --- Residential mortgages --- Basel II --- Loans --- Financial regulation and supervision --- Nonperforming loans --- Asset requirements --- State supervision --- New Zealand