Preparing for Basel IV (whilst commending Basel III) : why liquidity risks still present a challenge to regulators in prudential supervision ( Part II)
AbstractWhilst the predecessor (Part I) to this paper addresses criticisms and challenges which have arisen in response to recent Basel Committee's initiatives aimed at addressing capital and liquidity standards, the present paper highlights further measures which are being introduced by the Basel Committee to address such criticisms and challenges. As well as presenting and drawing attention to proposals which could serve as means of addressing challenges presented by liquidity risks, Part I of the paper concludes with the result that market based regulation is an essential and vital tool in the Basel Committee's efforts to address some of the challenges presented by liquidity risks. The present paper highlights the Basel Committee's acknowledgement of this conclusion. Furthermore, it draws attention to other areas which are considered to constitute fertile substrates for purposes of future research. This paper will also illustrate why the potential of banking regulations and disclosure requirements to impact risk taking levels is not only dependent on certain factors such as the dissemination of information to appropriate recipients, appropriate volume of disseminated information, when to disseminate such information, but also on other factors such as ownership structures and effective corporate governance measures aimed fostering monitoring, supervision and accountability. In arguing that additional leverage ratios which have recently been proposed by the Basel Committee will play a key role in facilitating the diversification of banks‘ liquid assets – via the new liquidity standards (Liquidity Coverage Ratio and the Net Stable Funding Ratio), contribution is also made to the current discussion on the resilience of the banking sector – albeit from the perspective of the stabilisation of the entire system.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 31689.
Date of creation: 30 Dec 2010
Date of revision:
liquidity risks; systemic risks; capital; standards; Basel III; moral hazard; disclosure; information; Liquidity Coverage Ratio (LCR); Net Stable Funding Ratio (NSFR); accountability; corporate governance;
Other versions of this item:
- Ojo, Marianne, 2010. "Preparing for Basel IV (whilst commending Basel III) : why liquidity risks still present a challenge to regulators in prudential supervision ( Part II)," MPRA Paper 32630, University Library of Munich, Germany.
- K2 - Law and Economics - - Regulation and Business Law
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- G3 - Financial Economics - - Corporate Finance and Governance
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G01 - Financial Economics - - General - - - Financial Crises
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.:
- Nikolaos Papanikolaou & Christian Wolff, 2010. "Leverage and risk in US commercial banking in the light of the current financial crisis," LSF Research Working Paper Series, Luxembourg School of Finance, University of Luxembourg 10-12, Luxembourg School of Finance, University of Luxembourg.
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