On the Feasibility of Risk Based Regulation
Risk based regulation has emerged as the primary ingredient in the Basel-II proposals, where a bank capital is to become a direct function of a bank's riskiness. While the notion that bank capital be risk sensitive is intuitively appealing, the actual implementation, in the form of Basel-II, carries with it a host of potentially perverse side effects. Basel-II may increase financial risk, both for individual institutions and the entire banking system, and hence promote financial instability. This can happen, e.g., due to the endogenous nature of risk (JEL G2)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 49 (2003)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Phone: +49 (89) 9224-0
Fax: 01865 267 985
Web page: https://academic.oup.com/cesifo
More information through EDIRC
|Order Information:||Web: http://www.oup.co.uk/journals|