bankingindustry. This goal is served by taking a broad view of thepayments business and analyzing information provided bylarge bank …

information that can be obtained onlythrough on-site examinations, such as confidential informationabout a bank’s troubled assets … or the examiner’sassessment of a bank’s internal controls. Changes over timein the quality of the examination information … length of time between bank examinations affects thequality of information available to supervisors. For thesepurposes, we …

[...]The most obvious possible, and undesirable,impact on bank behaviour of risk-weighted capital requirementsis that … excessive differentials in the weights appliedto different categories of assets might induce banks to substituteaway from highly … risk-weighted assets. In the early1990s, U.S. banks shifted sharply from corporate lendingto investing in government …

bank’s portfolio can be examined.[...] …[...]This paper examines the impact that the PCAstandards had on bank portfolios following the passage ofFDICIA in 1991 … (1997) to study the impactof risk-based capital, is used to examine how PCA simultaneouslyinfluenced bank capital ratios and …

)framework. First, the regulatory measures of “capital” maynot represent a bank’s true capacity to absorb unexpectedlosses. Deficiencies …Bank supervisors have long recognized two types of shortcomingsin the Basle Accord’s risk-based capital (RBC … in reported loan loss reserves, forexample, could mask deteriorations in banks’ economic networth. Second, the …

corporations,regardless of their creditworthiness. Such anapproach might encourage banks to eliminate loans thatcan be terminated …

In August 1996, the U.S. bank regulatory agenciesadopted the market risk amendment (MRA) to the 1988Basle Capital … Accord. The MRA, which became effectivein January 1998, requires that commercial banks withsignificant trading activities set …