How Much Bank Capital is Enough: Reconciling the Views of Academics and Regulators

Bancni vestnik, 61(11), 83-90.

19 Pages Posted: 17 Jul 2014

See all articles by Matej Marinc

Matej Marinc

University of Ljubljana - Faculty of Economics

Mojmir Mrak

University of Ljubljana

Vasja Rant

University of Ljubljana

Date Written: October 15, 2012

Abstract

The global financial crisis has further highlighted the importance of bank capital regulation for the stability of the banking system. This article aims to reconcile the views of the academics and regulators about bank capital regulation. Lightweight and procyclical bank capital regulation with ample possibilities for regulatory arbitrage has contributed to the pre-crisis lending boom and subsequent credit crunch. As a result, new capital standards have been drawn and new regulatory and supervisory frameworks have been created, particularly in the EU. The regulatory overhaul aims at establishing a well capitalized banking system that is better able to cope with economic and financial fluctuations. Yet, the path ahead is not without difficulties. We stress that capital regulation and its impact cannot be analyzed in isolation but in combination with other regulatory and supervisory environment.

Keywords: Bank Regulation, Capital Regulation, Bank Capital, Baking Crisis, Financial Crisis

JEL Classification: G20, G21, G28, G32, G38, H81, K23

Suggested Citation

Marinc, Matej and Mrak, Mojmir and Rant, Vasja, How Much Bank Capital is Enough: Reconciling the Views of Academics and Regulators (October 15, 2012). Bancni vestnik, 61(11), 83-90., Available at SSRN: https://ssrn.com/abstract=2467012

Matej Marinc (Contact Author)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Mojmir Mrak

University of Ljubljana ( email )

Dunajska 104
Ljubljana, 1000
Slovenia

Vasja Rant

University of Ljubljana ( email )

Dunajska 104
Ljubljana, 1000
Slovenia

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