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Basel III in Reality

Author

Listed:
  • Fratianni, Michele

    (Indiana University)

  • Pattison, John C.

    (Financial Consultant)

Abstract

Financial regulation has shifted from a system as an oligopoly dominated by the G2/G5 to expanded clubs like the Basel Committee for Banking Supervision. Expansive clubs have to agree to terms that are closer to the preferences of soft-regulation members. Yet, once a global agreement on minimum standards, such as Basel III, is reached, the task is left to national or regional regulators. Deviations from the Basel III standards are bound to occur; the complexity of the agreement will facilitate an asymmetric implementation of national regulation and supervision. Countries like Australia, Canada, the United Kingdom, the United States, and some Scandinavian countries have chosen higher standards. On the other hand, we should expect deviations to take place in member countries of the Eurozone that are heterogeneous having different preferences and trade-off between regulatory stringency and economic activity. The requirements of both global clubs and regional club regarding transparency, monitoring, and a level playing field will also cause a collision. This paper reports examples of heterogenous applications of supervisions and reforms.

Suggested Citation

  • Fratianni, Michele & Pattison, John C., 2015. "Basel III in Reality," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30, pages 1-28.
    • Handle: RePEc:ris:integr:0650
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    Citations

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    Cited by:

    1. Pietro Alessandrini & Michele Fratianni & Luca Papi & Alberto Zazzaro, 2016. "Banks, regions and development after the crisis and under the new regulatory system," Mo.Fi.R. Working Papers 124, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    2. Ferri, Giovanni & Pesic, Valerio, 2017. "Bank regulatory arbitrage via risk weighted assets dispersion," Journal of Financial Stability, Elsevier, vol. 33(C), pages 331-345.
    3. Pietro Alessandrini & Michele Fratianni & Luca Papi & Alberto Zazzaro, 2016. "The asymmetric burden of regulation: will local banks survive?," Mo.Fi.R. Working Papers 125, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    4. Orla McCullagh & Mark Cummins & Sheila Killian, 2023. "Decoupling VaR and regulatory capital: an examination of practitioners’ experience of market risk regulation," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(3), pages 321-336, September.

    More about this item

    Keywords

    Basel III; Clubs; Financial Regulation; Eurozone; Asymmetries;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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