Basel III and Responding to the Recent Financial Crisis: Progress Made by the Basel Committee in Relation to the Need for Increased Bank Capital and Increased Quality of Loss Absorbing Capital

Kindle Direct Publishing April 2014

15 Pages Posted: 22 Sep 2010 Last revised: 29 Apr 2014

Marianne Ojo

George Mason University; American Accounting Association

Multiple version iconThere are 2 versions of this paper

Date Written: September 22, 2010

Abstract

Developments since the introduction of the 1988 Basel Capital Accord have resulted in growing realisation that new forms of risks have emerged and that previously existing and managed forms require further redress. The revised Capital Accord, Basel II, evolved to a form of meta regulation – a type of regulation which involves the risk management of internal risks within firms.

The 1988 Basel Accord was adopted as a means of achieving two primary objectives: Firstly, “…to help strengthen the soundness and stability of the international banking system – this being facilitated where international banking organisations were encouraged to supplement their capital positions; and secondly, to mitigate competitive inequalities.”

As well as briefly outlining various efforts and measures which have been undertaken and adopted by several bodies in response to the recent Financial Crisis, this paper considers why efforts aimed at developing a new framework, namely, Basel III, have been undertaken and global developments which have promulgated the need for such a framework. Further, it attempts to evaluate the strengths and flaws inherent in the present and future regulatory frameworks by drawing a comparison between Basel II and the enhanced framework which will eventually be referred to as Basel III.

Keywords: Capital, Cyclicality, Buffers, Risk, Regulation, Internal Controls, Equity, Liquidity, Losses, Forward Looking Provisions, Silent Participations, Basel III

Suggested Citation

Ojo, Marianne, Basel III and Responding to the Recent Financial Crisis: Progress Made by the Basel Committee in Relation to the Need for Increased Bank Capital and Increased Quality of Loss Absorbing Capital (September 22, 2010). Kindle Direct Publishing April 2014. Available at SSRN: https://ssrn.com/abstract=1680886 or http://dx.doi.org/10.2139/ssrn.1680886

Marianne Ojo (Contact Author)

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

American Accounting Association

5717 Bessie Drive
Sarasota, FL 34233-2399
United States

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