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The Challenges of Basel III for Romanian Banking System  [PDF]
Anca Elena NUCU
Theoretical and Applied Economics , 2011,
Abstract: Basel III represents a fundamental review of the regulatory and supervision framework of the banking industry in the future, the aim being to strengthen the stability of the financial system. The purpose of this paper is to analyze the impact of Basel III introduction upon the banking system at European level, respectively, upon the Romanian banking system. If at European level it is estimated a substantial deficit in capital and liquidity, with major impact on profitability indicators, the impact of Basel III upon banking system in Romania is considered to be limited. The measures which credit institutions could take to mitigate the impact of alignment with the new standards are business model adjustment and balance sheet restructuring.
Modern International Regulatory Requirements for Bank’s Liquidity Современные международные требования регулирования ликвидности банков  [PDF]
Krupka Igor M.,Pankiv Christina P
Business Inform , 2013,
Abstract: The article describes new requirements of banking activity regulation to capital and liquidity in the context of the Basel standards. It analyses the state of the Ukrainian banking supervision and readiness of banks to realise renewed standards. It justifies the necessity of introduction of international standards of banking supervision in Ukraine in order to provide financial stability of banking system and integration into the global financial environment. It proposes practical recommendations on reformation of domestic banking regulation in accordance with the Basel III terms. Раскрыты новые требования регулирования банковской деятельности к банковскому капиталу и ликвидности в контексте Базельских стандартов. Проанализировано состояние украинского банковского надзора и готовность банков к выполнению обновленных стандартов. Обоснована необходимость введения международных стандартов банковского надзора в Украине с целью обеспечения финансовой устойчивости банковской системы и интеграции в мировую финансовую среду. Предложены практические рекомендации реформирования отечественного банковского регулирования в соответствии с условиями Базель III.
Towards a New Basel Accord with More Rigorous Settlements
Petru PRUNEA,Daniela COSMA
Theoretical and Applied Economics , 2010,
Abstract: The recent financial crisis made the banking sector more vulnerable to shocks. The system was characterised by weaknesses: too much leverage in the banking; not enough high quality capital to absorb losses and excessive credit growth based on underwriting standards and under pricing of liquidity. This article is about a new accord Basel III and the view of this framework. Basel III will be finalized before November 2010, and will be implemented by the end of 2012. Basel III is going to be implemented in the United States. All G–20 countries should adopt progressively this capital framework. The Basel Committee on Banking Supervision and national authorities should develop and agree a global framework for promoting a stronger liquidity in financial institutions. The reform program is to raise the resilience of the banking sector through promoting more sustainable growth, both in the near term and over the long therm. The initiatives of Basel Committee will develop a set of reforms based on four steps: public consultation, impact assessment, overall calibration and macroeconomic impact assessment over the transition period.
Basel III and the Net Stable Funding Ratio  [PDF]
F. Gideon,Mark A. Petersen,Janine Mukuddem-Petersen,LNP Hlatshwayo
ISRN Applied Mathematics , 2013, DOI: 10.1155/2013/582707
Abstract: We validate the new Basel liquidity standards as encapsulated by the net stable funding ratio in a quantitative manner. In this regard, we consider the dynamics of inverse net stable funding ratio as a measure to quantify the bank’s prospects for a stable funding over a period of a year. In essence, this justifies how Basel III liquidity standards can be effectively implemented in mitigating liquidity problems. We also discuss various classes of available stable funding and required stable funding. Furthermore, we discuss an optimal control problem for a continuous-time inverse net stable funding ratio. In particular, we make optimal choices for the inverse net stable funding targets in order to formulate its cost. This is normally done by obtaining analytic solution of the value function. Finally, we provide a numerical example for the dynamics of the inverse net stable funding ratio to identify trends in which banks behavior convey forward looking information on long-term market liquidity developments. 1. Introduction The episode of financial market turbulence in 2007–2009 has depicted the importance of liquidity for normal functioning of the financial system. It is because of this background that we are contributing to the procedures for the regulation and supervision of sound liquidity risk management for banks. Some of the well-documented materials to this regard are the notable papers by [1–4]. The Basel Committee on Banking Supervision (BCBS) outlines certain measures to strengthen global capital and liquidity regulations. The objective for these measures is to improve the banking sector's ability to ensure that risk does not spillover to the real economy. The measures are formulated in a form of a principle for sound liquidity risk management and supervision comprising quantitative and qualitative management instruments (see, e.g., [1]). In essence, the response provides guidance on risk management and supervision for funding liquidity risk and promotes a better risk management in that critical area of financial segment. As such, the committee will coordinate rigorous followup by supervisors to ensure that banks adhere to these fundamentals principles (see [3] for more details). The global economic crisis which recently attack the financial system occurs due to liquidity constraints. We define liquidity constraint as an arbitrary limit on the amount an individual can borrow or an arbitrary alteration in the interest rate they pay. In some instances banks exchange assets in the form of collateral in order to have access to finances. In essence,
Implementation of Basel II standards in commercial banks in B&H  [PDF]
Radomir ?ali?
Singidunum Journal of Applied Sciences , 2012,
Abstract: Based on the study of primary and secondary data from the selected sample of commercial banks, a preliminary statement of the state of the banking system in B&H has been made for the purpose of determining the current level of application and making the appropriate recommendations concerning the continuation of the implementation of Basel II standards. It has been noted that all banks in the sample give high priority to those standards, that they already have certain knowledge of the area and that they provide constant training to their employees with the aim of enabling full implementation of those standards. It has also been determined that the regulatory authorities in B&H have not done enough on adopting new regulation related to the area and that operating results of the banks are not satisfactory, especially in terms of rate of return and capital adequacy of banks. Thus, it is recommended that the banks in B&H, in addition to their regular activities, collect new sources of funding, especially their own funds or fresh equity since the attraction of other sources does not make much sense without it. Also, the regulatory authorities (banking agencies) should adopt new regulation (decrees), and impose the implementation of new standards in the banking industry together with drafting of specific instructions for the application of individual regulation, preparation of different formats of reports (specific layout of forms) and the implementation of standards and instructions in the banks.
Basel III – Between Global Thinking and Local Acting  [PDF]
Vasile DEDU,Dan Costin NI?ESCU
Theoretical and Applied Economics , 2012,
Abstract: The financial crisis has demonstrated that self-regulation is not sufficient to markets and financial institutions with systemic importance.Permissive regulatory policies, allowing the development speed of global banking financial system, have played an important role in emphasizing the upward slope of the financial crisis.The new regulations known as Basel III framework aimed the strengthening of prudential capital and liquidity of financial institutions and create a stronger banking and financial system more resilient to shocks.Basel III is trying to eliminate the shortcomings of Basel II, by more extensive rules on integrated risk management in banking and financial environment.
Basel Regulations, Economic Capital and Their Implications for the Turkish Banking Industry = Basel Kurallar , Ekonomik Sermaye ve Bu Kavramlar n Türk Bankac l k Sekt rü in aret Etti i Hususlar
G?ksel T?RYAK?
Dogus University Journal , 2009,
Abstract: Capital is one of the crucial financial sources of fund for all economic agents. It is also a basic financial indicator that should be measured and managed, especially for banks. Basel Banking Committee has been publishing a number of standards for almost two decades in order to establish harmonized capital requirement for banks, which set basis for regulatory capital. On the other hand, economic capital, which is another concept in managing capital in banks, is a consequence of theoretical studies and risk management and capital requirement practices. It is defined as the optimum bank capital level measured by quantifying all relevant risks involved. In this paper, these capital regulations are explained and implications of Basel Rules and economic capital models for The Turkish Banking Industry are summarized.
Banking Sector Liquidity and Financial Crisis in Nigeria  [cached]
Samuel O. Fadare
International Journal of Economics and Finance , 2011, DOI: 10.5539/ijef.v3n5p3
Abstract: Employing a linear least square model and time series data from 1980 to 2009, this paper studies the determinants of Banking Sector liquidity in Nigeria and assesses the extent to which the recent financial crises affected liquidity in deposit money banks in the country. The paper makes some interesting findings. First, we find that only liquidity ratio, monetary policy rate and lagged loan-to-deposit ratio are significant for predicting Banking Sector liquidity. Secondly, we find that a decrease in monetary policy rates, liquidity ratios, volatility of output in relation to trend output, and the demand for cash, leads to an increase in current loan-to-deposit ratios; while a decrease in currency in circulation in proportion to Banking Sector deposits; and lagged loan-to-deposit ratios leads to a decline in current loan-to-deposit ratios. Our result suggests that during periods of economic or financial crises, deposit money banks are significantly illiquid relative to benchmarks, and getting liquidity monetary policies right during these periods is crucial in ensuring the survival of the Banking Sector.
The Efficacy of Liquidity Management and Banking Performance in Nigeria.  [PDF]
ANDREW O AGBADA and OSUJI C.C.
International Review of Management and Business Research , 2013, DOI: 31/12/2013
Abstract: This paper explores the efficacy of liquidity management and banking performance in Nigeria. It is aimed at examining empirically the effect of efficient liquidity management on banking performance in Nigeria particularly in the aftermath of several banking reforms, rescue mission by the Central bank of Nigeria (CBN) and the attendant Merger and Acquisitions. Profitability and Return on Capital Employed (ROCE) were adopted as our performance indicators or dependent variables. The research design is survey design, accomplished through the administration of structured questionnaires. Data obtained were first presented in tables of percentages and pie charts and were empirically analyzed by Pearson product-moment correlation coefficient (r). Findings from the empirical analysis were quite robust and clearly indicate that there is significant relationship between efficient liquidity management and banking performance and that efficient liquidity management enhance the soundness of bank. These findings which may have re-echoed results from similar researches re-emphasize that efficient liquidity management have important policy implications for developing and emerging economies. Considering the systemic consequences of liquidity problems, it is recommended that a more professional approach should be taken in its management.
THE CORRELATION BETWEEN THE MARKET RISK AND THE LIQUIDITY RISK IN THE ROMANIAN BANKING SECTOR  [PDF]
Trenca Ioan,Zoicas-Ienciu Adrian
Annals of the University of Oradea : Economic Science , 2010,
Abstract: A series of studies on liquidity management have appeared during the financial crisis, many of them comparing the funding liquidity with the market liquidity. The paper offers a dynamic image about the liquidity in the Romanian banking sector and its integration with the market risk, comparing the Value at Risk approach with the Liquidity at Risk approach. The research also wants to highlight the most significant features to consider in order to implement an effective liquidity risk management and to achieve a more integrated supervisory framework.
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