Bank capital regulation in contemporary banking theory: a review of the literature
AbstractThis paper reviews the theoretical literature on bank capital regulation and analyses some of the approaches to redesigning the 1988 Basle Accord on capital standards. The paper starts with a review of the literature on the design of the financial system and the existence of banks. It proceeds with a presentation of the market failures that justify banking regulation and an analysis of the mechanisms that have been suggested to deal with these failures. The paper then reviews the theoretical literature on bank capital regulation. This is followed by a brief history of capital regulation since the 1988 Basle Capital Accord and a presentation of both the alternative approaches that have been put forward on setting capital standards and the Basel Committee's proposal for a new capital adequacy framework.
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Bibliographic InfoPaper provided by Bank for International Settlements in its series BIS Working Papers with number 90.
Length: 44 pages
Date of creation: Sep 2000
Date of revision:
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- Freixas, Xavier & Gabillon, Emmanuelle, 1999.
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- S. Nagarajan & C. W. Sealey, 1997. "Can Delegating Bank Regulation to Market Forces Really Work?," New York University, Leonard N. Stern School Finance Department Working Paper Seires 97-8, New York University, Leonard N. Stern School of Business-.
- Fries, Steven & Mella-Barral, Pierre & Perraudin, William, 1997.
"Optimal bank reorganization and the fair pricing of deposit guarantees,"
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Elsevier, vol. 21(4), pages 441-468, April.
- Fries,S. & Mella-Barral,P. & Perraudin,W.R.M., 1995. "Optimal Bank Reorganisation and the Fair Pricing of Deposit Garantees," Cambridge Working Papers in Economics 9417, Faculty of Economics, University of Cambridge.
- Arupratan Daripa & Simone Varotto, 1997. "Agency Incentives and Reputational Distortions: a Comparison of the Effectiveness of Value-at-Risk and Pre-commitment in Regulating Market Risk," Bank of England working papers 69, Bank of England.
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