ACRIP
Bank Capital Regulations around the World
Report

Bank Capital Regulations around the World

What Explains the Differences?

Gazi Ishak Kara
Federal Reserve Board, 2016
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Editorial Rating

7

Qualities

  • Analytical
  • Innovative
  • Scientific

Recommendation

Long the global standard for bank capital adequacy management, the Basel protocols on bank capital buffers are well-intended yet complex. That complexity leads to a broad interpretation and application of its rules, as economist Gazi Ishak Kara notes in his scholarly analysis. The macroeconomic conditions of individual countries often bear on how strictly they implement the capital reserve rules. getAbstract recommends Kara’s report – written more for the economist and central banker – for its rigor and focus on an all-important domain in bank regulation.

Summary

The Basel bank capital accords have evolved since their inception in 1988 to address the growing complexity of the international banking environment. More than 100 nations adhered to the Basel I protocols. In 2004 and in 2010, Basel II and Basel III, respectively, offered updates to leverage, capital and liquidity guidelines. The vast detail contained therein has led national regulators to apply the rules with a view to addressing the risks specific to their countries’ macroeconomic environment. For example, nations can impose the Basel 8% minimum capital ratio on their banks, but the domestic authorities decide...

About the Author

Gazi Isak Kara is a senior economist at the Board of Governors of the Federal Reserve System.

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