Capital Adequacy and Risk Management – Premises for Strengthening Financial System Stability

2013 ◽  
Author(s):  
Amrollah Amini ◽  
Mostafa Emami ◽  
Alireza Emami
Keyword(s):  
Risk Management ◽  
Financial System ◽  
Capital Adequacy ◽  
System Stability

scholarly journals Evaluating the Relationship Between The Banking System Stability and The Internal Capital Adequacy Assessment Process: Evidence From The Egyptian Banking Sector

2018 ◽  
Author(s):  
Karim Fahmy
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Research Study ◽  
Banking System ◽  
Capital Adequacy ◽  
Assessment Process ◽  
System Stability ◽  
Capital Management ◽  
Internal Capital ◽  
Adequacy Assessment

In the repercussions of the latest financial crisis that have occurred on the years 2008-2009, to fortify the stability of the banking systems, policy makers, and the Basel Committee on Banking Supervision – BCBS, together with national regulators have built up a few safety measures, and structures to guarantee that banks establishments keep up adequate capital levels through using risk management tools, in specific the Internal Capital Adequacy Assessment Processes (ICAAP). They all have called for thorough evaluations and assessments for the structure and components of risk management frameworks, tools, and practices whether by banks, regulators, analysts and risk management experts consistently, to ascertain the adequacy of the banking systems, policies, arrangements and techniques for overseeing risks, and guaranteeing the sufficiency of holding appropriate capital levels for confronting normal, as well as adverse and unexpected situations or emergencies. The main objectives of this research study is to shed the light on the ICAAP as one of the main keys of risk management programs, a process by which banks can use to ensure that they operate with an appropriate levels of capital, forward looking processes for capital planning covering a broad range of risks across banks, activities beyond simple capital management, and brings together risk and capital management activities in a form that can be used to support business decisions. The research study shall evaluate the significant relationship between the Banking System Stability (dependent variable) and the Internal Capital Adequacy Assessment Process (ICAAP – independent variable) with evidence from the Egyptian Banking Sector.

Testing the interrelatedness of banking stability measures

2014 ◽  
Vol 6 (1) ◽  
pp. 25-45 ◽  
Author(s):  
Vighneswara Swamy
Keyword(s):  
Emerging Economies ◽  
Financial Stability ◽  
Banking System ◽  
Financial System ◽  
Capital Adequacy ◽  
System Stability ◽  
Var Model ◽  
Content Type ◽  
Banking Stability ◽  
Asset Quality

Purpose – This study aims to investigate the inter-relatedness and the dynamics of banking stability measures and offers answers for some of the related issues such as does financial stability require the soundness of banking institutions, the stability of markets, the absence of turbulence and low volatility? and to what extent the soundness of banking sector in the case of emerging economies can help financial system stability. Design/methodology/approach – This study investigates banking stability by structuring a recursive micro panel vector auto regressive (VAR) model and corroborates the significance of the interrelatedness of the bank-specific variables such as liquidity, asset quality, capital adequacy and profitability by employing a robust panel data drawn from 56 leading banks for a period of 12 years. Findings – A significant contribution of this study is in establishing that liquidity in the banking-dominated financial system is reciprocally related with asset quality, capital adequacy, and profitability of the banking system and in effectively forecasting banking stability employing micro panel recursive VAR model. Research limitations/implications – The study could be further broadened by employing a macro and structural VAR modelling to forecast banking stability. Practical implications – This paper is one among the evolving body of literature that underscores the significant relationship between banking system resilience and financial stability in the context of emerging economies dominated with banking systems. Further, the forecast model is able to capture the dynamics of banking stability with greater and appreciable accuracy. Originality/value – The uniqueness of the study is in modelling banking stability measures in the context of banking-dominated emerging economy financial systems by employing micro panel recursive VAR model by deriving data from 58 leading banks for the period of 12 years from 1996 to 2009 and in offering insights in understanding financial stability with comprehensive literature review.

scholarly journals Evaluating the Relationship Between The Banking System Stability and The Internal Capital Adequacy Assessment Process: Evidence From The Egyptian Banking Sector

2018 ◽  
Author(s):  
Karim Fahmy
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Research Study ◽  
Banking System ◽  
Capital Adequacy ◽  
Assessment Process ◽  
System Stability ◽  
Capital Management ◽  
Internal Capital ◽  
Adequacy Assessment

In the repercussions of the latest financial crisis that have occurred on the years 2008-2009, to fortify the stability of the banking systems, policy makers, and the Basel Committee on Banking Supervision – BCBS, together with national regulators have built up a few safety measures, and structures to guarantee that banks establishments keep up adequate capital levels through using risk management tools, in specific the Internal Capital Adequacy Assessment Processes (ICAAP). They all have called for thorough evaluations and assessments for the structure and components of risk management frameworks, tools, and practices whether by banks, regulators, analysts and risk management experts consistently, to ascertain the adequacy of the banking systems, policies, arrangements and techniques for overseeing risks, and guaranteeing the sufficiency of holding appropriate capital levels for confronting normal, as well as adverse and unexpected situations or emergencies. The main objectives of this research study is to shed the light on the ICAAP as one of the main keys of risk management programs, a process by which banks can use to ensure that they operate with an appropriate levels of capital, forward looking processes for capital planning covering a broad range of risks across banks, activities beyond simple capital management, and brings together risk and capital management activities in a form that can be used to support business decisions. The research study shall evaluate the significant relationship between the Banking System Stability (dependent variable) and the Internal Capital Adequacy Assessment Process (ICAAP – independent variable) with evidence from the Egyptian Banking Sector.

Capital Requirements, Capital Adequacy and Risk Management

2000 ◽  
Author(s):  
Emilio Barone ◽  
Rainer Masera
Keyword(s):  
Risk Management ◽  
Capital Requirements ◽  
Capital Adequacy

Stock Market Prices and Financial System Stability

2019 ◽  
Author(s):  
Zaäfri A. Husodo ◽  
Muhammad Budi Prasetyo ◽  
Rizky Luxianto ◽  
Theresia Silitonga ◽  
Januar Hafidz ◽  
...  
Keyword(s):  
Stock Market ◽  
Financial System ◽  
System Stability ◽  
Market Prices

Critical Analysis of the Zero Risk Weight Privilege for European Sovereign Debt in Light of Art. 124 TFEU

2020 ◽  
Vol 17 (1) ◽  
Author(s):  
Patrick Hauser
Keyword(s):  
Financial Institutions ◽  
Sovereign Debt ◽  
Banking System ◽  
Financial System ◽  
Significant Risk ◽  
Capital Adequacy ◽  
Individual Member ◽  
Member States ◽  
The Individual ◽  
Credit Institutions

AbstractThe zero risk weight privilege for European sovereign debt in the current capital adequacy requirements for credit institutions incentivises credit institutions to acquire and hold sovereign debt. However, it also poses a significant risk to the stability of the banking system and thus the financial system as a whole. It is argued that this privilege should not only be abolished due to the risk it entails but that it is also non conformant with EU primary law. Art. 124 TFEU prohibits privileged access of the EU and Member States' public sector to financial institutions except for prudential considerations. The protective purpose of Art. 124 TFEU to ensure sound budgetary policies by subjecting public borrowing to the same rules as borrowing by other market participants is thwarted by the uniform zero risk weight privilege. Further, as this privilege does not take into account the varying creditworthiness of the individual Member States it does not promote the soundness of financial institutions so as to strengthen the soundness of the financial system as whole, but rather endangers systemic stability. The zero risk weight privilege is therefore not based on prudential considerations and hence violates Art. 124 TFEU.

FINANCIAL SYSTEM RISKS

2021 ◽  
pp. 13-21
Author(s):  
S. E. Demidova ◽  
Keyword(s):  
Public Finance ◽  
Social Economic ◽  
Financial System ◽  
System Stability ◽  
Theoretical Research ◽  
Financial Risks ◽  
The Public ◽  
Systemic Risks ◽  
The Social ◽  
The Impact

Government interference in the social-economic processes through the implementation of anti-crisis measures and fiscal expansion holds the embodiment of financial risks for economic entities. As a result, government debt and budget gaps at the continuing drop of real disposable household income and companies’ profitability grow. Over a long-term horizon, the decisions made can cause a financial system misbalance and new risk generation, including systemic risks in the sphere of public finance. The author carries out the theoretical research of financial system risks, which can result in a decrease in the system stability in general. The study determines that there is no single theoretical concept of financial risks of the public sector. Within the research, the author analyzed the approaches to systemic risks in various economic sectors and decomposed systemic risk of the public finance sphere. The study specified global factors of influence on the financial system stability, determined the impact factors and common fiscal limitations considering the needs in the execution of state obligations. The pandemic factor – COVID-19 spread is highlighted as an exogenous factor of impact on the formation of financial system misbalances. The main threat to the financial system stability considered in terms of the functional-institutional approach is the deficiency of economic entities’ liquidity. Unprecedented budgetary measures of anti-crisis financial regulation, the deferred impact – tax preferences, and monetary measures had an immediate influence on the liquidity volume during the implementation of anti-COVID activities. Tools of budgetary monitoring, budget expenditures reviews, tax expenditures reviews, and budget consolidation ensure the budget mechanism flexibility. Factors producing financial system risks and the selected measures of state regulation will set the trends for the social-economic development of the country in the coming years.

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