The Leverage Ratio as a Bank Discipline Device
This paper investigates bank portfolio composition under Basel II where the amount of required capital is determined by bank?s own risk assessment. We particularly show that in presence of asymmetric information between the bank and the supervisor, it has incentives to understate its risk taking which could be curbed by the addition of the simple leverage ratio as suggested in Basel III.
Year of publication: |
2011
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Authors: | Rugemintwari, Clovis |
Published in: |
Revue économique. - Presses de Sciences-Po. - Vol. 62.2011, 3, p. 479-490
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Publisher: |
Presses de Sciences-Po |
Saved in:
freely available
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