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Capital, Trust and Competitiveness in the Banking Sector

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  • Gehrig, Thomas

Abstract

This note critically assesses the Basel reform process of capital regulation. It highlights the political nature of this process and argues that the absence of clearly spelled-out societal objectives has been detrimental in furthering stability and soundness of the banking systems in the run-up of the 2007/8 financial crisis. The positive externalities of bank capital have not hitherto been explicitly been taken into consideration.

Suggested Citation

  • Gehrig, Thomas, 2013. "Capital, Trust and Competitiveness in the Banking Sector," CEPR Discussion Papers 9348, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9348
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    References listed on IDEAS

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    1. Thomas Gehrig, 1995. "Capital Adequacy Rules: Implications for Banks' Risk-Taking," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(IV), pages 747-764, December.
    2. Blum, Jurg & Hellwig, Martin, 1995. "The macroeconomic implications of capital adequacy requirements for banks," European Economic Review, Elsevier, vol. 39(3-4), pages 739-749, April.
    3. Berger, Allen N, 1995. "The Relationship between Capital and Earnings in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 432-456, May.
    4. Berger, Allen N. & Bouwman, Christa H. S., 2011. "How Does Capital Affect Bank Performance during Financial Crises?," Working Papers 11-36, University of Pennsylvania, Wharton School, Weiss Center.
    5. Gehrig, Thomas, 1998. "Screening, cross-border banking, and the allocation of credit," Research in Economics, Elsevier, vol. 52(4), pages 387-407, December.
    6. Arnoud W.A. Boot, 1996. "Comments on the paper by THOMAS GEHRIG: "Market Structure, Monitoring and Capital Adequacy Regulation"," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 132(IV), pages 703-706, December.
    7. Martin Hellwig, 1995. "Systemic Aspects of Risk Management in Banking and Finance," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(IV), pages 723-737, December.
    8. Berger, Allen N. & Bouwman, Christa H. S., 2011. "How Does Capital Affect Bank Performance during Financial Crises?," Working Papers 11-22, University of Pennsylvania, Wharton School, Weiss Center.
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    Cited by:

    1. repec:zbw:bofrdp:2018_016 is not listed on IDEAS
    2. Gehrig, Thomas & Iannino, Maria Chiara, 2021. "Did the Basel Process of capital regulation enhance the resiliency of European banks?," Journal of Financial Stability, Elsevier, vol. 55(C).
    3. Gehrig, Thomas & Iannino, Maria Chiara, 2021. "Did the Basel Process of capital regulation enhance the resiliency of European banks?," Journal of Financial Stability, Elsevier, vol. 55(C).

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    More about this item

    Keywords

    Bank capital; Basel process of capital regulation; Trust;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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