The Basel Accords, while extremely influential, are oftentimes too detailed and technical to be easily accessible to the nontechnical policymaker or interested scholar. This paper looks to fill that gap by detailing the origin, regulation, implementation, criticism, and results of both Basel I...

Although beneficial allocational effects have been a central motivation for the Basel II capital adequacy reform, the interaction of these effects with Basel II's procyclical impact has been less discussed. In this paper, we investigate the effect of Basel II on the efficiency of bank lending....

Recently, banking literature has had a quest for appropriate pricing of bank loans under the new Basel II rules and has been in pursuit of possible outcomes for undertaking such credit risk. In this paper, we propose a simplified formula to price bank's corporate loans, aiming at making bank...

Systemic banking crises often continue into recessions with large output losses. In this paper we ask whether the way governments intervene in the financial sector has an impact on the economy's subsequent performance. Our theoretical analysis focuses on bank incentives to manage bad loans. We...

We develop a model to show how shareholder-creditor agency conflicts interact with accounting measurement rules to influence the design of bank capital regulation. Relative to a benchmark autarkic regime, higher capital requirements mitigate inefficient asset substitution, but exacerbate...

We develop an empirical model to test the relation between compliance with Basel I capital requirements and the probability of bank failure during ‘normal’ economic conditions and times of financial crises. We also seek to determine whether increased capital requirements would further reduce...

The US Basel III Final Rule was issued by the Banking Agencies (Fed, OCC and FDIC) in July 2013. The Rule implements the international Basel III framework defined by the Basel Committee on Banking Supervision and represents a major overhaul of the US banks’ capital requirements, since the...

This paper analyzes the new Basel Accord abilities to reduce the externalities that result from the underpriced deposit insurance. A moral hazard framework is adopted to describe the optimal behavior of banks that endogenously select the characteristics of their credit portfolio in order to...

The purpose of our study is to provide an overview of the revisions made to the Basel III regulatory framework in the aftermath of the 2007 crisis, with regard to measuring the risk associated with positions included in the trading book. The calculation of the regulatory capital requirement...

As a result of the Enron scandal, new regulations were enacted that increased the capital charge for holding assets in off-balance sheet vehicles. I utilize a triple difference specification to identify the effect of this exogenous regulatory shock on bank systematic risk exposure. I find that...