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EU System Important Banks Adjustment to New Regulatory Capital Requests: Expected Outcome and Potential Risks

In: Financije teorija i suvremena pitanja = Finance - theory and contemporary issues

Author

Listed:
  • Roberto Ercegovac

    (University of Split, Faculty of Economics)

  • Zrinka Buljan

Abstract

After the crisis of particular banking firm or the crisis of total banking system, there arises the discussion on volume and structure of bank capital in risk weight assets ratio. Growing insolvency of banking firms support the apologists of additional capital request inside the new prudential regulation. Systemic important banks are under special regulatory treatment because of their relative importance in the stability of the banking system and the maintenance of interbank market functionalities. This paper analyses the harmonization of systemically significant banks with regulatory capital requirements, with special emphasis on their capitalization above minimum regulatory standards. According to the conclusions of the research, paper reviews the expected effects on the stability of the banking system and potential risks arising from the reduced credit activity of banks and the allocation of credit potentials to risk assets to cover the additional regulatory costs.

Suggested Citation

  • Roberto Ercegovac & Zrinka Buljan, 2018. "EU System Important Banks Adjustment to New Regulatory Capital Requests: Expected Outcome and Potential Risks," Occasional Publications, in: Financije teorija i suvremena pitanja = Finance - theory and contemporary issues, edition 1, volume 1, chapter 6, pages 127-139, Josip Juraj Strossmayer University of Osijek, Faculty of Economics.
    • Handle: RePEc:osi:chaptr:18-06
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    More about this item

    Keywords

    systemic important banks; regulation; capital requirements; credit activities; regulatory costs;
    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
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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