Trade-off theories of capital structure describe how a firm chooses its leverage for a given set of assets. This paper studies how the predictions of such trade-off theories change if one accounts for the possibility that firms can invest in financial markets. In that case, the set of available...

The Basel Accord has often been regarded as one of the most successful forms of international regulation due to the high level of compliance from various actors despite the lack of direct repercussions. International financial regulation as a form of soft law is able to exert a power over actors...

The Advanced Measurement Approach (AMA) to operational risk capital is vulnerable to gaming, complex, and lacks comparability. The Standardized Measurement Approach (SMA) to operational risk capital lacks risk sensitivity and is unlikely to be appropriately conservative for US banks. An...

The Basel III Accord was the centerpiece of the international regulatory response to the global financial crisis, setting new capital requirements for internationally active banks. This paper explains the divergent preferences on Basel III of national regulators in three countries that...

This study examines the impact of the Basel III regulatory framework on the efficiency of Islamic and conventional banks using conditional quantile regressions. We find that Islamic banks are significantly more efficient than conventional banks. We also find that, relative to conventional banks,...

With the introduction of the Capital Requirements Regulation (CRR) in the European Union, the qualitative requirements for bank regulatory capital have changed. These changes aim at implementing in Europe the Basel III principles for better bank capital that is able to absorb losses of banks,...

This paper investigates the potential aggravation of the Debt Overhang problem in banking stemming from the introduction of the new Basel III liquidity ratio: the Net Stable Funding Ratio (NSFR). By replacing short for long term debt (or terming out long term debt) on the back of the NSFR, banks...

​According to EU legislation, the national authorities should use the principle of 'guided discretion' in setting the countercyclical capital buffer (CCB), which increases banks' resilience against systemic risk associated with periods of excessive credit growth. This means that the decision...

This paper reviews studies exploring how higher bank capital requirements affect economic growth. There is little evidence of a direct effect; research focuses on the indirect effects of capital requirements on credit supply, bank asset risk, and cost of bank capital, which in turn can affect...

In the wake of the financial crisis of 2007-2009, the Basel Committee on Banking Supervision (BCBS) faced the critical task of diagnosing what went wrong and then updating regulatory standards aimed at preventing it from occurring again. In seeking to strengthen the microprudential regulation...