scholarly journals BASEL III LIQUIDITY RISK AND KOSOVO BANKING SYSTEM

2019 ◽  
Vol 34 (5) ◽  
pp. 1329-1335
Author(s):  
Hysen Lajqi
Keyword(s):  
European Union ◽  
Banking Sector ◽  
Financial System ◽  
Liquidity Risk ◽  
Capital Requirements ◽  
Basel Iii ◽  
Bank Capital ◽  
The European Union ◽  
Coverage Ratio ◽  
Basel Committee

The financial crisis 2007-2009 prompted the Basel Committee on Banking Supervision (BCBS) to intensify its efforts to strengthen the principles and standards for capital, as well as for the measurement and management of liquidity risk. Risk management is very important in the financial system, especially in banks. Among various risks Banks face is a liquidity risk it’s managing enables Banks to fulfil their obligationsBasel III consists of set of measures internally agreed. The implementation of Basel III will considerably increase the quality of banks' capital and significantly raise the required level of their capital. In addition, it will provide a "macro prudential overlay" to better deal with systemic risk.Like all Basel Committee standards, Basel III standards are minimum requirements which apply to internationally active banks. Members are committed to implementing and applying standards in their jurisdictions within the time frame established by the Committee.To ensure that banks have sufficient liquidity to survive potential liquidity shocks, as happened few years ago, the Basel Committee has issued two new globally revised minimum standards under the Basel III rules for the first time in the banking history: LCR – Liquidity Coverage Ratio and NSFR – Net Stable Funding Ratio that contain new requirements for bank capital, as well as standardized rules in the liquidity area.Banks need to fully comply with LCR and NSFR rules by January 1, 2019, according to the Capital Requirements Directive & Capital Requirements Regulation (CRD IV & CRR) rules.Basel III rules, in the European Union attain their applicable judicial form through REGULATION (EU) No 575/2013. The regulatory package is due to enter into force on January 1st, 2014, but some provisions will be implemented gradually between 2014 and 2019 and will fully come into force on January 1st, 2019. But these rules are likely to undergo some revisions due to a proposal by European Union (EU), so implementation horizon could go being beyond 2019.Performance of the Kosovo banking sector continued to be positive, thus contributing in maintaining the financial and economic stability of the country. Kosovo’s financial system continues to be characterized with sustainable increase in all its constituent sectors. The banking sector in Kosovo as most successful story is developed by many international institutions, characterized by a large presence of foreign capital, where 89. 2% of all assets are managed by foreign banks and development is based on international standards.Banking sector continued to have good liquidity position, with the main liquidity indicators standing above the minimal level as a required by the regulation.The implementation of Basel III rules in Kosovo related to liquidity depends on the local regulator and Basel III standards.

scholarly journals Implementation of the Basel III and its effect on Bahrain’s banking sector.

2017 ◽  
Vol 15 (1) ◽  
pp. 224-234
Author(s):  
Maryam Abdulla Althawadi ◽  
Gagan Kukreja
Keyword(s):  
Banking Sector ◽  
Capital Requirements ◽  
Basel Iii ◽  
Financial Health ◽  
Banking Supervision ◽  
Complete Protection ◽  
Basel Committee ◽  
Banking Regulations ◽  
Global Banking ◽  
Research Findings

The financial crisis which occurred in 2007 and 2008 has had a major impact on the global banking industry. As a result, many banks went bankrupt or the governments had bailed them out. Thus, to protect banks against such a situation, the Basel Committee on Banking Supervision (BCBS) had scrutinized and altered the banking regulations, termed as the Basel III. The purpose of this study is to analyse the Basel III paradigm and its impact on the banks’ financial health of Bahrain. This kind of study will enhance the understanding of Basel III and its impact on banking sector for researchers of GCC in general and Bahrain in particular. The approach of the study is qualitative, whereas the theoretical framework has been used in the literature review. The empirical results were acquired from the interviews of various personnel from banks in Bahrain to gauge their perspective on Basel III paradigm. The overall perspectives of the banking personnel about Basel III were that it should have more stringent requirements. In this case, the capital requirements are considered to be too low and the risk weights are too unrealistic. However, majority of the banking personnel are still optimistic that Basel III does grant superior protection, but it doesn’t provide complete protection against the chance of failure. According to the research findings, majority of respondents were optimistic and feel that it does help in protecting the banks, while others consider it completely useless and failed to prevent failures.

scholarly journals Basel IV implementation: a review of the case of the European Union

2020 ◽  
Vol 4 (1) ◽  
pp. 7-24
Author(s):  
Mete Feridun ◽  
Alper Özün
Keyword(s):  
European Union ◽  
Financial Stability ◽  
Banking Sector ◽  
Capital Requirements ◽  
Policy Implications ◽  
The European Union ◽  
Content Type ◽  
Secondary Sources ◽  
Global Banking ◽  
Risk Framework

PurposeIntroducing radical changes to the methodologies for the determination of capital requirements, the final stage of the Basel III standards, which is referred to as “Basel IV” by the industry, will be a significant challenge for the global banking sector. This article reviews the main components of the new framework, analyses its ongoing implementation in the European Union and discusses its potential impact on banks, putting forward policy recommendations.Design/methodology/approachThis article uses primary sources such as the publications by the Basel Committee for Banking Supervision and the European Commission. It also reviews the secondary sources, including both academic articles and analyses by various stakeholders. However, this article does not undertake any empirical analysis.FindingsThis article discusses that Basel IV will introduce strategic, operational and regulatory challenges for banks in scope. It also identifies a number of areas which are subject to further debate in the European Union such as the enhanced due diligence requirements under the new credit risk framework; governance, reporting and control rules under the operational risk framework; exemptions for certain derivative transactions under the credit valuation adjustment framework and the level of application of the capital floors within banking groups. This article concludes that the global implementation of the reforms by all jurisdictions and transposition into national banking laws concurrently with the European Union in line with the Basel Committee's implementation timeline is important from a financial stability standpoint.Originality/valueThe article presents an up-to-date and comprehensive review of the practical implications of Basel IV standards. It analyses the implementation of the standards in the case of the European Union, reviews the potential policy implications and presents recommendations for risk management practitioners.

scholarly journals KESIAPAN PERBANKAN SYARI’AH DI INDONESIA DALAM PENERAPAN LIQUIDITY COVERAGE RATIO BASEL III

2018 ◽  
Vol 1 (2) ◽  
pp. 165
Author(s):  
Dian Nuriyah Solissa
Keyword(s):  
The Other ◽  
Basel Iii ◽  
Bank Capital ◽  
Banking Supervision ◽  
Coverage Ratio ◽  
Global Capital ◽  
Basel Committee ◽  
Global Liquidity ◽  
High Degree

Abstract2008 crisis was hypothetically to be an impact of particular condition in which banking around the countries had the high degree of leverage and decrease the bank capital quality. The other influencing factors are the quality of corporate governance and the quality of risk management. Having seen these challenges, Basel Committee on Banking Supervision (BCBS) published a document of “Basel III: Global Regulatory Framework for More Resilient Banks and Banking Systems” on Desember 2010 as the new initiation.The scopes of Basel III are, (1) Empowering the Global Capital Framework, (2) Recognizing the Global Liquidity. This research works on providing an implementation prospect of global liquidity standard to Indonesian Syariah Banking.The results show that the average of syariah banking LCR has only reached 51,6% that means there must be certain improvement to minimally reach 60% before January 2015 2015. Furthermore, the yearly growth of LCR which stands on 3,22% in average is claimed to be far from the yearly targeted increase whisch is 10%, Thus, this current study suggest syariah banking to put an effort by uplifting the HQLA using the funding strategy to absorb more deposits. Keywords: Basel III, Liquidity Coverage Ratio, Syariah banking

THE PROCESSES OF CONSOLIDATION AND CONCENTRATION OF CAPITALAS IMPORTANT DETERMINANTS OF ECONOMIC GLOBALIZATION PROCESSES AFFECTING THE ECONOMIC DEVELOPMENT OF THE BANKING SYSTEM IN POLAND

2018 ◽  
Vol 4 (2) ◽  
pp. 217-244
Author(s):  
Dariusz Prokopowicz
Keyword(s):  
European Union ◽  
Banking Sector ◽  
Banking System ◽  
Financial System ◽  
Developed Countries ◽  
Central Banking ◽  
The European Union ◽  
Market Structures ◽  
System Functioning ◽  
Internal Procedures

The systemic transformation and socio-economic, which was initiated in Poland since 1989, are related with the intensified globalization processes that take place in various economic and social spheres of economy, including banking. Financial institutions as well as commercial banks are the entities which are not only subjects to theglobalization processes, they co-create these processes. The key attributes of globalization include deregulation processes, digitalization and internationalization, ie. global determinants, which were correlated with the adaptation of the financial system functioning in Poland to the European Union standards. To adjust internal procedures, product offerings and techniques of ICT operating in Poland banking to EU standards one has to consider the processes of consolidation and concentration of capital. These processes are applied in the commercial dimension of the financial system, including the banking sector since the mid-90s. Financial systemthat currently exists in Poland and includes the banking sector is among the best adapted to the EU standards. It is simultaneously one of the most globalized sectors of the economy. The key date for this issue concerns the year 2004, when Poland entered the European Union market structures. Currently, it is assumed that the process of globalization of financial markets and the banking system in Poland, apart from the consolidation processes and adjustments has been determined by such factors as administrative and supervisory goals of the central banking and supervisory bodies in the financial system and adjusting banking norms of law to the standards of Western highly developed countries.

Bank capital, liquidity and risk in Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emmanuel Carsamer ◽  
Anthony Abbam ◽  
Yaw N. Queku
Keyword(s):  
Capital Accumulation ◽  
Trust Management ◽  
Theoretical Perspective ◽  
Generalized Method Of Moments ◽  
Basel Iii ◽  
Bank Capital ◽  
Short Term ◽  
Content Type ◽  
Coverage Ratio ◽  
Liquidity Measures

Purpose Capital, risk and liquidity are the vitality of the banking industry, which can improve the efficiency of banking and promote the efficiency of resource allocation. The purpose of this study is to examine how Basel III new liquidity ratios affect bank capital and risk adjustments and how banks respond to the new liquidity rules. Design/methodology/approach The authors adopted the system generalized method of moments (GMM) to examine how Basel III new liquidity ratios affect bank capital and risk adjustments and how banks respond to the new liquidity rules. Based on the call reports data from banks, GMM was used to test the hypotheses that new liquidity ratios affect bank capital and risk adjustments, as well as how banks respond to the regulation. Findings The results indicate banks targeted capital, risk and liquidity and simultaneously coordinate short-term adjustments in capital and risk. New liquidity measures enable banks to coordinate risk and liquidity decisions. Short-term adjustments in new liquidity rules inversely impact bank capital. Short-term adjustments in new liquidity rules inversely impact bank capital and capital adjustments adversely affect changes in the liquidity coverage ratio (LCR). Research limitations/implications The primary results revealed that Ghanaian banks simultaneously coordinate and target capital, risk exposure and liquidity level. Also, capital adjustments positively influence risk adjustments and vice versa while bidirectional negative coordination exists between bank capital and risk on one hand and liquidity on the other hand. Short-term adjustments in new liquidity rule inversely impact bank capital and capital adjustments adversely affect changes in the LCR. The findings partially confirm the theoretical predictions of Repullo (2005) regarding the negative links between capital, risk and liquidity but the authors have higher capital induces higher risk. Practical implications Banks should balance off their targeted risk and liquidity in order not to sacrifice capital accumulation for liquidity. Originality/value This research offers new contributions in the research of bank management of capital and liquidity toward banks during a financial crisis from a theoretical perspective and trust management from an applicative perspective.

Basel III liquidity regulatory framework and bank liquidity creation in MENA countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anas Alaoui Mdaghri ◽  
Lahsen Oubdi
Keyword(s):  
Negative Impact ◽  
Middle Eastern ◽  
Policy Implications ◽  
Basel Iii ◽  
Bank Capital ◽  
Mena Region ◽  
Content Type ◽  
Dynamic Panel Model ◽  
Mena Countries ◽  
Coverage Ratio

Purpose This paper aims to investigate the potential impact of the Basel III liquidity requirements, namely, the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR), on bank liquidity creation. Design/methodology/approach The authors developed a dynamic panel model using the Quasi-Maximum Likelihood estimation on an unbalanced panel dataset of 129 commercial banks operating in 10 Middle Eastern and North African (MENA) countries from 2009 to 2017. Findings The results show that the NSFR significantly negatively affects liquidity creation. Similarly, the LCR exerts a substantial negative impact on the liquidity creation of the sampled MENA banks. These findings suggest that complying with both liquidity requirements tends to curtail liquidity creation. Moreover, further regression analysis of large and small bank sub-samples uncovered results similar to the overall MENA sample. Research limitations/implications The findings raise interesting policy implications and suggest a trade-off between the benefits of the financial resiliency induced by implementing liquidity requirements and the creation of liquidity essential for promoting economic growth in the region. Originality/value Most empirical research focuses on the relationship between bank capital and liquidity creation. To the knowledge, this paper is the first to provide empirical evidence on the effect of both the NSFR and LCR regulatory liquidity standards on bank liquidity creation in the MENA region.

An Overview of Competition Policy Practice

2016 ◽  
Author(s):  
Xavier Vives
Keyword(s):  
European Union ◽  
United Kingdom ◽  
Consumer Protection ◽  
Competition Policy ◽  
Foreign Exchange Market ◽  
Banking Sector ◽  
The European Union ◽  
Policy Practice ◽  
The United Kingdom ◽  
Mediterranean Countries

This chapter examines the competition policy practice in different jurisdictions, focusing on the European Union, the United Kingdom, the United States, and a number of emerging and developing economies (Brazil, China, India, Mexico, Russia, and southern Mediterranean countries). It begins with a discussion of the concerns of the competition authorities in the European Union and the United Kingdom about the banking sector and proceeds by considering practice in the main competition policy areas that have been active in banking: mergers, cartels and restrictive agreements, and state aid. Among other issues, it reviews the tensions between the prudential and the competition authorities, the recent cases of international cartels on Libor and foreign exchange market, and some landmark cases in the European Union. It also looks at consumer protection, with a new impulse from behavioral ideas, and the convergence in aims between consumer protection and competition policies.

Statistical Models for Operational Risk

2011 ◽  
pp. 1848-1853
Author(s):  
Concetto Elvio Bonafede
Keyword(s):  
Statistical Models ◽  
Banking Sector ◽  
Financial Risks ◽  
Bank Capital ◽  
Basel Committee ◽  
Operational Risks ◽  
Credit Risks ◽  
New Basel Capital Accord ◽  
Bank Capital Requirement ◽  
Principal Elements

A statistical model is a possible representation (not necessarily complex) of a situation of the real world. Models are useful to give a good knowledge of the principal elements of the examined situation and so to make previsions or to control such a situation. In the banking sector, models, techniques and regulations have been developed for evaluating Market and Credit risks, for linking together risks, capital and profit opportunity. The regulations and vigilance standards on the capital have been developed from the Basel Committee founded at the end of 1974 by the G10. The standards for the capital’s measurement system were defined in 1988 with the “Capital Accord” (BIS, 1988); nowadays, it is supported from over 150 countries around the world. In January 2001 the Basel Committee published the document “The New Basel Capital Accord” (BIS, 2001), which is a consultative document to define the new regulation for the bank capital requirement. Such a document has been revisited many times (see BIS, 2005). With the new accord there is the necessity of appraising and managing, beyond the financial risks, also the category of the operational risks (OR) already responsible of losses and bankruptcies (Cruz (Ed.), 2004; Alexander (Ed.), 2003; Cruz, 2002).

In Search of Stability: Bank Capital and Liquidity Requirements

2020 ◽  
pp. 52-70
Author(s):  
Scott James ◽  
Lucia Quaglia
Keyword(s):  
Banking Regulation ◽  
Capital Requirements ◽  
Political Support ◽  
Basel Iii ◽  
Bank Capital ◽  
Financial Industry ◽  
Domestic Constraints ◽  
The Uk ◽  
Institutional Architecture ◽  
Crd Iv

Following the financial crisis, UK preferences shifted decisively in favour of trading up bank capital and liquidity requirements. To reassure voters, elected officials intervened in the regulatory process by strengthening the domestic institutional architecture for banking regulation. Financial regulators leveraged this political support to overcome resistance from the financial industry, but also pushed for international/EU harmonization of capital requirements to avoid damaging the UK’s competitiveness. Internationally, UK regulators therefore acted as pace-setters and exerted significant influence over the design of the Basel III Accord. However, at the EU level, the UK was forced to act as a foot-dragger by prolonging negotiations over the Capital Requirements Directive IV (CRD IV) in an attempt to resist Franco-German efforts to water down the rules. But UK negotiators were more successful in leveraging domestic constraints to oppose the Commission’s attempt to impose the ‘maximum’ harmonization of bank capital.

The New Actors of Macroprudential Supervision in Germany and Europe – A Critical Evaluation

2015 ◽  
Vol 27 (6) ◽  
Author(s):  
Elke Gurlit ◽  
Isabel Schnabel
Keyword(s):  
European Union ◽  
Critical Evaluation ◽  
Financial System ◽  
Institutional Setting ◽  
The European Union ◽  
Economic Perspective ◽  
Systemic Risks ◽  
Multi Level ◽  
Crd Iv

AbstractWith the CRR/CRD IV package being in effect, the banking supervisors of the European Union possess an impressive set of macroprudential instruments to fight systemic risks in the financial system. However, in order to be effective and efficient, the instruments need an appropriate organizational and institutional setting. The text analyzes the complex multi-level network of actors of macroprudential supervision from a legal and economic perspective.

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