Basel II replaces Basel I’s implicit capital charge on operational risk with an explicit charge. Certain U.S. banks concentrated in processing-related business lines – which have significant operational risk – could thus face an increase in overall minimum regulatory capital requirements. Some have argued that, as a result, these so-called “processing banks” would be disadvantaged vis-à-vis competitors not subject to regulatory capital requirements for operational risk. This paper evaluates these concerns.
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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Basel II White Paper with number
5.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Douglas W. Diamond & Raghuram G. Rajan, 1999.
"A Theory of Bank Capital,"
NBER Working Papers
7431, National Bureau of Economic Research, Inc.
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Douglas W. Diamond & Raghuram G. Rajan, .
"A Theory of Bank Capital,"
CRSP working papers
363, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
Douglas W. Diamond & Raghuram G. Rajan, 2000.
"A Theory of Bank Capital,"
Journal of Finance,
American Finance Association, vol. 55(6), pages 2431-2465, December.
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