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The new Basel Capital Accord: A major advance at a turbulent time

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  • Chris Terry

Abstract

In January 2008, the Australian Prudential Regulation Authority introduced the second-generation capital requirement, Basel II, that substantially extended the 1988 Capital Accord of the Basel Committee on Banking Supervision. This paper explains the main features of Basel II; reviews concerns about the likely effects of the new capital requirement; and assesses the new capital requirement in the context of the global financial crisis.

Suggested Citation

  • Chris Terry, 2009. "The new Basel Capital Accord: A major advance at a turbulent time," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 16(1), pages 25-44.
    • Handle: RePEc:acb:agenda:v:16:y:2009:i:1:p:25-44
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    File URL: http://press-files.anu.edu.au/downloads/press/p88211/pdf/agenda-16-01-AR-2.pdf
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    References listed on IDEAS

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    1. Tor Jacobson & Jesper Lindé & Kasper Roszbach, 2005. "Credit Risk Versus Capital Requirements under Basel II: Are SME Loans and Retail Credit Really Different?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 28(1), pages 43-75, October.
    2. Mark Illing & Graydon Paulin, 2005. "Basel II and the Cyclicality of Bank Capital," Canadian Public Policy, University of Toronto Press, vol. 31(2), pages 161-180, June.
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    4. Charles Goodhart & Boris Hofmann & Miguel Segoviano, 2004. "Bank Regulation and Macroeconomic Fluctuations," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(4), pages 591-615, Winter.
    5. Altman, Edward I. & Saunders, Anthony, 2001. "An analysis and critique of the BIS proposal on capital adequacy and ratings," Journal of Banking & Finance, Elsevier, vol. 25(1), pages 25-46, January.
    6. Edward J. Kane, 2012. "Ethical Failures in Regulating and Supervising the Pursuit of Safety Net Subsidies," Chapters, in: Kern Alexander & Rahul Dhumale (ed.), Research Handbook on International Financial Regulation, chapter 3, Edward Elgar Publishing.
    7. Edward Altman & Gabriele Sabato, 2005. "Effects of the New Basel Capital Accord on Bank Capital Requirements for SMEs," Journal of Financial Services Research, Springer;Western Finance Association, vol. 28(1), pages 15-42, October.
    8. Flannery, Mark J, 1998. "Using Market Information in Prudential Bank Supervision: A Review of the U.S. Empirical Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 273-305, August.
    9. Warren P. Hogan & Ian G. Sharpe, 1997. "Prudential Regulation of the Financial System: A Functional Approach," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 4(1), pages 15-28.
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    Cited by:

    1. Peter Docherty & Ron Bird & Timo Henckel & Gordon Menzies, 2016. "Australian prudential regulation before and after the global financial crisis," CAMA Working Papers 2016-49, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Mervyn K. Lewis, 2011. "Monetary Policies During the Financial Crisis: An Appraisal," Chapters, in: Steven Kates (ed.), The Global Financial Crisis, chapter 8, Edward Elgar Publishing.

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