bank capital, banking regulation, Basel II, global crisis, lobbying
Abstract
The paper provides evidence about Basel II, as international banking regulations failure in recent global financial crisis. It describes old and new banking regulations main aspects on the base of before and during financial crisis periods. Banks’ holding of reasonable capital buffers in excess of minimum requirements could alleviate the procyclicality problem potentially exacerbated by the rating-sensitive capital charges of Basel II. Determining the sufficient buffer size is an important risk management task for banks. Actual bank capital is driven by bank income and default losses, whereas capital requirements within Basel II are driven by rating transitions. New regulatory approach to measuring capital adequacy appears consistent with banks’ own risk evaluations. The purpose of the paper is to show Basel II’s role in financial crisis based on qualitative inductive research. Also paper mentions some political aspects of modern banking regulations and future suggestions and recommendations for after crisis banking future.
Author Biography
Ilia Botsvadze, International Black Sea University
MA, Research Assistant, Faculty of Business Management, International Black Sea University, Tbilisi
