Topic 9. Bank regulation and Basel

1
Topic 9. Bank regulation and Basel

• 9.1 Capital
• 9.2 Reasons for regulating bank capital
• 9.3 History of bank regulation
• 9.4 Pre-1988
• 9.5 BIS Accord (Basel I)
• 9.6 1996 Amendment
• 9.7 Basel II
• 9.8 Basel III

2
9.1 Capital
3
9.1 Capital

• Capital can be interpreted as the amount of money
  that the bank should keep in order to protect it
  from an extremely unfavorable loss.
• The expected losses are often taken into account
  in pricing the financial products by FI.
• The capital a FI requires should cover the
  difference between expected losses over some time
  horizon and