Open AccessBasel Accord and Banking Competitivity
Author(s) -
Lassaad Jebali,
Siwar Hmedi
Publication year - 2016
Publication title -
journal of asian business strategy
Language(s) - English
Resource type - Journals
eISSN - 2309-8295
pISSN - 2225-4226
DOI - 10.18488/journal.1006/2015.5.12/1006.12.252.258
Subject(s) - capital requirement , capital adequacy ratio , risk adjusted return on capital , intermediation , capital (architecture) , basel ii , economics , economic capital , crunch , monetary economics , business , credit crunch , risk weighted asset , basel iii , financial system , financial capital , finance , capital formation , microeconomics , market economy , human capital , profit (economics) , medicine , archaeology , history , incentive , physical therapy
The first Basel Accord 1988 focused on the adoption of fixed minimum capital requirements, which led some banks to maintain higher capital ratios than they deserve some other banks succeeded in limiting risk-taking relative to capital as intended. Banks which didn’t succeed the risk management have been able to take actions to reduce their effectiveness, either by shifting to riskier assets within the same weighting band or through capital arbitrage. It looks at two possible side effects. Firstly, whether in some periods capital requirements may have had the effect of constraining bank lending thereby causing a credit crunch. Secondly, the introduction of fixed minimum requirements for banks affected competitiveness with relative forms of intermediation.