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A prolegomenon to future capital requirements

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  • Arturo Estrella

Abstract

Bank supervisors have made significant strides since 1980 in the area of capital requirements, and they are currently pursuing further refinements. This article looks beyond such developments at longer term supervisory goals. Abstracting to some extent from the current regulatory framework, the author attempts to delineate a set of fundamental principles for future work on capital requirements. He distinguishes minimum capital--an objective standard imposed by regulators across firms--from optimum capital--a subjective standard adopted by individual firms to cover their own risks-- and shows how the two concepts can form the basis for a general supervisory approach to capital.

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Bibliographic Info

Article provided by Federal Reserve Bank of New York in its journal Economic Policy Review.

Volume (Year): (1995)
Issue (Month): Jul ()
Pages: 1-12

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Handle: RePEc:fip:fednep:y:1995:i:jul:p:1-12:n:v.1.no.2

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Keywords: Bank capital ; Bank supervision;

References

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  1. Franklin R. Edwards & Frederic S. Mishkin, 1995. "The Decline of Traditional Banking: Implications for Financial Stabilityand Regulatory Policy," NBER Working Papers 4993, National Bureau of Economic Research, Inc.
  2. White, Lawrence J, 1989. "The Reform of Federal Deposit Insurance," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 11-29, Fall.
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Citations

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Cited by:
  1. Arturo Estrella, 1998. "Formulas or supervision? Remarks on the future of regulatory capital," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 191-200.
  2. Jose A. Lopez, 1997. "Regulatory evaluation of value-at-risk models," Staff Reports 33, Federal Reserve Bank of New York.
  3. Arturo Estrella, 1998. "The Future of Regulatory Capital: General Principles and Specific Proposals," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 134(IV), pages 599-616, December.
  4. Franz R. Hahn, . "Macroprudential Financial Regulation and Monetary Policy," WIFO Working Papers 154, WIFO.
  5. Mingo, John J., 2000. "Policy implications of the Federal Reserve study of credit risk models at major US banking institutions," Journal of Banking & Finance, Elsevier, vol. 24(1-2), pages 15-33, January.
  6. Beverly J. Hirtle & Mark Levonian & Marc Saidenberg & Stefan Walter & David Wright, 2001. "Using credit risk models for regulatory capital: issues and options," Economic Policy Review, Federal Reserve Bank of New York, issue Mar, pages 19-36.
  7. Darryll Hendricks & Beverly Hirtle, 1997. "Bank capital requirements for market risk: the internal models approach," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 1-12.
  8. Frederic S. Mishkin, 1999. "Financial Consolidation: Dangers and Opportunities," NBER Working Papers 6655, National Bureau of Economic Research, Inc.
  9. von Hagen, Jürgen & Fender, Ingo, 1998. "Central bank policy in a more perfect financial system," ZEI Working Papers B 03-1998, ZEI - Center for European Integration Studies, University of Bonn.
  10. Mayes, David & Vesala, Jukka, 1998. "On the Problems of Home Country Control," Research Discussion Papers 20/1998, Bank of Finland.
  11. Arturo Estrella & Sangkyun Park & Stavros Peristiani, 2000. "Capital ratios as predictors of bank failure," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 33-52.
  12. Andrew Kuritzkes & Til Schuermann & Scott M. Weiner, 2002. "Risk Measurement, Risk Management and Capital Adequacy in Financial Conglomerates," Center for Financial Institutions Working Papers 03-02, Wharton School Center for Financial Institutions, University of Pennsylvania.

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