Regulatory Capital and the Supervision of Financial Institutions: Some Basic Distinctions and Policy Choices

  • Arturo Estrella


Discussion of regulatory capital for banks and other financial intermediaries has tended to focus on very detailed issues, as opposed to the general lay of the land. For instance, regulators have tended to concentrate on increasingly complex formulas designed to calculate minimum regulatory requirements.1 These formulas have traditionally been based on general reasoning, although they are increasingly dependent on statistical models. Academics, on the other hand, have focused on mathematical models that lead to explicit expressions for the optimum amount of capital for a firm, usually from the point of view of its owners or managers.2


Credit Risk Policy Choice Capital Requirement Economic Capital Deposit Insurance 
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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Arturo Estrella
    • 1
  1. 1.Federal Reserve Bank of New YorkUSA

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