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Emerging Issues in Banking Regulation

Author

Listed:
  • Sunil Sharma
  • Ralph Chami
  • Mohsin S. Khan

Abstract

The paper provides an overview of the profound and rapid changes in banking brought about by technology and deregulation, and discusses the hurdles that will have to be negotiated for putting in place the three pillars-capital adequacy rules, supervision, and market discipline-of the bank regulatory framework envisioned by the New Basel Accord (Basel II). It argues that, especially for developing countries, finding the right balance between regulation, supervision, and market discipline is likely to be difficult. Considerable technical expertise as well as political discipline-which can be viewed as a fourth pillar-will be required to implement Basel II.

Suggested Citation

  • Sunil Sharma & Ralph Chami & Mohsin S. Khan, 2003. "Emerging Issues in Banking Regulation," IMF Working Papers 03/101, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/101
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    References listed on IDEAS

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    1. Peek, Joe & Rosengren, Eric, 1995. "Bank regulation and the credit crunch," Journal of Banking & Finance, Elsevier, vol. 19(3-4), pages 679-692, June.
    2. Eva Catarineu-Rabell & Patricia Jackson & Dimitrios Tsomocos, 2005. "Procyclicality and the new Basel Accord - banks’ choice of loan rating system," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 537-557.
    3. Paul H. Kupiec & James M. O'Brien, 1995. "Recent developments in bank capital regulation of market risks," Finance and Economics Discussion Series 95-51, Board of Governors of the Federal Reserve System (U.S.).
    4. Black, Fischer & Cox, John C, 1976. "Valuing Corporate Securities: Some Effects of Bond Indenture Provisions," Journal of Finance, American Finance Association, vol. 31(2), pages 351-367, May.
    5. Merton, Robert C, 1974. "On the Pricing of Corporate Debt: The Risk Structure of Interest Rates," Journal of Finance, American Finance Association, vol. 29(2), pages 449-470, May.
    6. Morris Goldstein, 1997. "Case for an International Banking Standard, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa47.
    7. Barth, James R. & Caprio, Gerard Jr. & Levine, Ross, 2004. "Bank regulation and supervision: what works best?," Journal of Financial Intermediation, Elsevier, vol. 13(2), pages 205-248, April.
    8. Demirguc-Kunt, Asli & Detragiache, Enrica, 2002. "Does deposit insurance increase banking system stability? An empirical investigation," Journal of Monetary Economics, Elsevier, pages 1373-1406.
    9. Jones, David, 2000. "Emerging problems with the Basel Capital Accord: Regulatory capital arbitrage and related issues," Journal of Banking & Finance, Elsevier, vol. 24(1-2), pages 35-58, January.
    10. Chami, Ralph & Cosimano, Thomas F., 2010. "Monetary policy with a touch of Basel," Journal of Economics and Business, Elsevier, vol. 62(3), pages 161-175, May.
    11. Ben S. Bernanke & Cara S. Lown, 1991. "The Credit Crunch," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 205-248.
    12. João A. C. Santos, 2000. "Bank capital regulation in contemporary banking theory: a review of the literature," BIS Working Papers 90, Bank for International Settlements.
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    Citations

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    Cited by:

    1. Steinherr, Alfred & Cisotta, Alessandro & Klar, Erik & Sehovic, Kenan, 2006. "Liberalizing Cross-Border Capital Flows: How Effective Are Institutional Arrangements against Crisis in Southeast Asia," Working Papers on Regional Economic Integration 6, Asian Development Bank.
    2. El-Hawary, Dahlia & Grais, Wafik & Iqbal, Zamir, 2007. "Diversity in the regulation of Islamic Financial Institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(5), pages 778-800, February.
    3. Adolfo Barajas & Ralph Chami & Thomas Cosimano, 2004. "Did the Basel Accord Cause a Credit Slowdown in Latin America?," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2004), pages 135-182, August.
    4. Kim, Kenneth A. & Lee, Sang-Hyop & Rhee, S. Ghon, 2007. "Large shareholder monitoring and regulation: The Japanese banking experience," Journal of Economics and Business, Elsevier, vol. 59(5), pages 466-486.
    5. Sapountzoglou Gerassimos, 2007. "A Quality Index for Evaluating the Bank Capital Adequacy According to Basel I and II," Stochastics and Quality Control, De Gruyter, vol. 22(2), pages 191-195, January.
    6. Daoud Barkat Daoud, 2003. "Quelle réglementation du capital bancaire pour les pays en développement ?," Revue d'Économie Financière, Programme National Persée, vol. 73(4), pages 311-323.

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