Financial services regulation in the wake of the crisis: The Capital Requirements Directive IV and the Capital Requirements Regulation
This paper analyzes the Capital Requirements Directive IV and the Capital Requirements Regulation, a new legislative package proposed by the European Commission in July 2011 which aims to strengthen the regulation of the banking sector and amend the European Union's rules on capital requirements for banks and investment firms. It is argued that the CRD IV package makes a great contribution towards creating a sounder and safer financial system, however, several aspects are insufficiently addressed and/or not comprehensive enough to produce the anticipated results. It is found that the main fallacies of the CRD IV proposal lay in increased risk-taking, procyclicality, deficient implementation, overreliance on credit rating agencies, and risk weightings. Moreover, the proposal does not touch upon the issues of the shadow banking system, diversification, the problem of 'too-big-to-fail' or the 'Volcker Rule'. It is, hence, concluded that the CRD IV proposal is not ambitious enough to address essential issues of systemic risk, regulatory arbitrage, or the fragility of the financial system.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.ipe-berlin.org/|
More information through EDIRC
References listed on IDEAS
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.:
- Garry J. Schinasi & Edwin M. Truman, 2010.
"Reform of the Global Financial Architecture,"
Working Paper Series
WP10-14, Peterson Institute for International Economics.
- Aliaga-Díaz, Roger & Olivero, María Pía, 2012. "Do Bank Capital Requirements Amplify Business Cycles? Bridging The Gap Between Theory And Empirics," Macroeconomic Dynamics, Cambridge University Press, vol. 16(03), pages 358-395, June.
- Adrian Blundell-Wignall & Paul Atkinson, 2010. "Thinking beyond Basel III: Necessary Solutions for Capital and Liquidity," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2010(1), pages 9-33.
- Vazquez, Francisco & Federico, Pablo, 2015.
"Bank funding structures and risk: Evidence from the global financial crisis,"
Journal of Banking & Finance,
Elsevier, vol. 61(C), pages 1-14.
- Pablo Federico & Francisco F. Vazquez, 2012. "Bank Funding Structures and Risk; Evidence From the Global Financial Crisis," IMF Working Papers 12/29, International Monetary Fund.
- Ines Drumond, 2009.
"Bank Capital Requirements, Business Cycle Fluctuations And The Basel Accords: A Synthesis,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 23(5), pages 798-830, December.
- Inês Drumond, 2008. "Bank Capital Requirements, Business Cycle Fluctuations and the Basel Accords: A Synthesis," FEP Working Papers 277, Universidade do Porto, Faculdade de Economia do Porto.
- Thomas Ferguson & Robert Johnson, 2009. "Too Big to Bail: The "Paulson Put," Presidential Politics, and the Global Financial Meltdown," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 38(2), pages 5-45, July.
- Francis, William B. & Osborne, Matthew, 2012. "Capital requirements and bank behavior in the UK: Are there lessons for international capital standards?," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 803-816.
- Andrei Shleifer & Robert W. Vishny, 2010.
"Fire Sales in Finance and Macroeconomics,"
NBER Working Papers
16642, National Bureau of Economic Research, Inc.
- Mathias Drehmann & Leonardo Gambacorta, 2012. "The effects of countercyclical capital buffers on bank lending," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 603-608, May.
- Jean-Charles Rochet, 2010. "Commentary: Systemic Risk: Changing the Regulatory Perspective," International Journal of Central Banking, International Journal of Central Banking, vol. 6(34), pages 259-276, December.
- Dirk Schoenmaker, 2010. "The Quest for Financial Stability in Europe," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
- Thomas Ferguson & Robert Johnson, 2009. "Too Big to Bail: The "Paulson Put," Presidential Politics, and the Global Financial Meltdown," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 38(1), pages 3-34, April.
- Agénor, Pierre-Richard & Pereira da Silva, Luiz A., 2012.
"Cyclical effects of bank capital requirements with imperfect credit markets,"
Journal of Financial Stability,
Elsevier, vol. 8(1), pages 43-56.
- Agenor, Pierre-Richard & Pereira da Silva, Luiz A., 2009. "Cyclical effects of bank capital requirements with imperfect credit markets," Policy Research Working Paper Series 5067, The World Bank.
- Pierre-Richard Agénor & Luiz A. Pereira da Silva, 2011. "Cyclical Effects of Bank Capital Requirements with Imperfect Credit Markets," Working Papers Series 234, Central Bank of Brazil, Research Department.
- Patrick Slovik & Boris Cournède, 2011. "Macroeconomic Impact of Basel III," OECD Economics Department Working Papers 844, OECD Publishing.
- Elisabetta Montanaro & Mario Tonveronachi, 2011. "A critical assessment of the European approach to financial reforms," PSL Quarterly Review, Economia civile, vol. 64(258), pages 193-226.
- Samuel G. Hanson & Anil K. Kashyap & Jeremy C. Stein, 2011. "A Macroprudential Approach to Financial Regulation," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 3-28, Winter.
- Ugo Sacchetti, 2010. "Global imbalances: a gathering storm," PSL Quarterly Review, Economia civile, vol. 63(252), pages 7-38.
- Benedicta Marzinotto & Jörg Rocholl, 2010. "The unequal effect of new banking rules in Europe," Policy Contributions 445, Bruegel.
- Henk J. Brouwer & Dirk Schoenmaker & Jukka Vesala & Nicola Brink & Michael Kock, 2010. "The Quest for Stability: the Financial Stability View," SUERF Studies, SUERF - The European Money and Finance Forum, number 2010/4 edited by Morten Balling, Jan Marc Berk and Marc-Olivier Strauss-Kahn, 00.
When requesting a correction, please mention this item's handle: RePEc:zbw:ipewps:182013. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.