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Financial Market Regulation in Germany - Capital Requirements of Financial Institutions

Author

Listed:
  • Daniel Karl Dietzer

    (Berlin School of Economics and Law)

Abstract

This paper examines capital adequacy regulation in Germany. The first part reviews capital adequacy regulation from the 1930s up to the financial crisis and identifies two main trends: a gradual softening of the eligibility criteria for equity and increasing reliance on internal risk models. While the first trend has been reversed following the financial crisis, internal risk models still play a central role. Therefore, the second part discusses the problems with the use of internal risk models and discusses the potentials of Basel 2.5 and Basel III to alleviate the identified problems. It is concluded that the relevant problems are not resolved. Therefore, in the final part some suggestions of how the problems could be addressed properly are given.

Suggested Citation

  • Daniel Karl Dietzer, 2015. "Financial Market Regulation in Germany - Capital Requirements of Financial Institutions," PSL Quarterly Review, Economia civile, vol. 68(272), pages 57-86.
    • Handle: RePEc:psl:pslqrr:2015:14
    as

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/12468/12889
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    References listed on IDEAS

    as
    1. Nancy Masschelein, 2007. "Monitoring pro-cyclicality under the capital requirements directive : preliminary concepts for developing a framework," Working Paper Document 120, National Bank of Belgium.
    2. Xavier Freixas & Jean-Charles Rochet, 2008. "Microeconomics of Banking, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062704, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Banking Regulation; Capital Adequacy; Risk Models; Germany;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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