Skip to main content
SpringerLink
Log in

Prudential Regulatory Norms

  • Chapter
Regulating the Financial Sector in the Era of Globalization

  • 74 Accesses

Abstract

Regulatory frameworks — often introduced or changed in the wake of the outbreak of scandals or crises — have generally sought to align private incentives with public interest. A well functioning financial sector therefore needs the underpinning of well designed and effectively implemented regulations, along with sound public policies. This chapter seeks to identify the vulnerabilities pertaining to the financial sector. It focuses on those peculiar to banks that have required governmental regulation. Capital adequacy and safety of payments systems — which have received privileged attention in international co-operation — are reviewed, along with other complementary prudential approaches relating to financial intermediation.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 29.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 16.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes and References

  1. See, for example, Martin Blâvarg and Patrick Nimander, ‘Inter-bank Exposures and Systemic Risk’, Sveriges Riksbank Economic Review Stockholm, 2002, 2nd quarter, pp. 19–45.

    Google Scholar 

  2. See, for example, Sonja Daltung, ‘The Relationship Between Price Stability and Financial Stability’, Sveriges Riksbank Economic Review Stockholm, 2001, 4th quarter, pp. 5–37.

    Google Scholar 

  3. See Charles Calomiris and Gary Gorton, ‘The Origins of Banking Panics: Models, Facts, and Bank Regulation’, in Glenn Hubbard (ed.), Financial Markets and Financial Crises, (University of Chicago Press, 1991), pp. 109–73.

    Google Scholar 

  4. See, for example, Anthony M. Santomero, president, Federal Reserve Bank of Philadelphia, ‘Does Bank Regulation Help Bank Customers?’, Business Review, Federal Reserve Bank of Philadelphia, 2002, 2nd quarter, pp. 1–6.

    Google Scholar 

  5. See Financial Stability Forum, Issues Paper of the Task Force on Implementation of Standards, Basel, 15 March 2000; also, Swiss Federal Banking Commission, Management Report 2000, Berne, pp. 170–5.

    Google Scholar 

  6. See, for example, Kate Langdon, ‘Implementing International Standards for Stronger Financial Systems’, BIS Quarterly Review, (Basel: Bank for International Settlements, March 2001), pp. 46–53.

    Google Scholar 

  7. See, for example, ECB, ‘International Supervisory Co-operation’, Monthly Bulletin, (Frankfurt: ECB, May 2002), pp. 55–66

    Google Scholar 

  8. also Shelagh Hefferman, Modern Banking in Theory and Practice, Chichester, England: John Wiley, 1996), pp. 271–2.

    Google Scholar 

  9. See, for example, National Bank of Belgium, The Oversight Responsibilities of Central Banks According to the Core Principles for Systemically Important Payment Systems (Brussels, 2002), pp. 81–95.

    Google Scholar 

  10. See Zuhayr Mikdashi, (ed.), Financial Intermediation in the 21st Century (Basingstoke: Palgrave/Macmillan, 2001), pp. 282 ff.

    Google Scholar 

  11. Gabriele Galati, ‘Settlement Risk in Foreign Exchange Markets and CLS Bank’, BIS Quarterly Review Basel, December 2002, pp. 55–65

    Google Scholar 

  12. and ECB, ‘CLS — Purpose, Concept and Implications’, Monthly Bulletin (Frankfurt: ECB, January 2003) pp. 53–66.

    Google Scholar 

  13. See ECB, ‘The Role of the Eurosystem in Payment and Clearing Systems’, Monthly Bulletin, Frankfurt, April 2002, pp. 47–59.

    Google Scholar 

  14. See, for example, US General Accounting Office, Payment Systems—Central Bank Roles Vary, but Goals Are the Same, Washington, DC, February 2002; and ‘RTGS plus Successfully Established’, Deutsche Bundesbank Monthly Report, Frankfurt, April 2002, pp. 57–70.

    Google Scholar 

  15. See, for example, A. Enge and B. Bakke, ‘Risk in the Norwegian Settlement System 1995–2000’, Economic Bulletin (Oslo: Norges Bank, April 2001), pp. 20–7; and ‘Real-time Gross Settlement in Japan: An Evaluation of the First Six Months’, Quarterly Bulletin, Bank of Japan, November 2001, pp. 132–49.

    Google Scholar 

  16. See US General Accounting Office, Information Systems — Opportunities Exist to Strengthen SEC’s Oversight Capacity and Security, Washington, DC, July 2001.

    Google Scholar 

  17. See, for example, Joseph E. Stiglitz, ‘Principles of Financial Regulation: A Dynamic Portfolio Approach’, The World Bank Research Observer, Spring 2001, pp. 1–18.

    Google Scholar 

  18. See, for example, Ralph C. Kumball, ‘Failures in Risk Management’, New England Economic Review, Boston, Mass., January/February 2000, pp. 3–12.

    Google Scholar 

  19. See, for example, ‘Mortgage-lending Agencies in America’, The Economist, 21 July 2001, pp. 61–2; ’Japan May Open Financial Sector’, Financial Times, 2 August 2001, p. 4; and US General Accounting Office, Federal Home Loan Bank System — Establishment of a New Capital Structure, Washington, DC, 20 July 2001.

    Google Scholar 

  20. See Martin N. Baily, Diana Farell and Susan Leend, ‘Hot Money’, McKinsey Quarterly New York, 2000, no. 2, pp, 108–19.

    Google Scholar 

  21. See, for example, P. Artzner, F. Delbaen, J.-M. Eber and D. Heath, ‘Coherent Measures of Risk’, Mathematical Finance, vol. 9, no. 3, 1999, pp. 203–28.

    Article  Google Scholar 

  22. See, for example, William C. Hunter and Stephen D. Smith (eds), ‘Risk Management in the Global Economy: Measurement, Management and Macroeconomic Implications,’ Journal of Banking & Finance, Special issue, vol. 26, 2002, pp. 303–74.

    Google Scholar 

  23. See, for example, I. Fender, M. S. Bibson and P. C. Mosset, ‘An International Survey of Stress Tests’, Current Issues in Economics and Finance, Federal Reserve Bank of New York, November 2001.

    Google Scholar 

  24. See, for example, Patricia Jackson, ‘Bank Capital Standards: The New Basel Accord’, Quarterly Bulletin, Bank of England, Spring 2001, pp. 55–63.

    Google Scholar 

  25. See, for example, Kathleen Beans, ‘Regulators & Bankers Disagree on Proposed Disclosure Rules’, The RMA Journal, (Philadelphia: The Risk management Association), September 2002, pp. 48–50.

    Google Scholar 

  26. See H. Benink and C. Wihlborg, ‘The New Basel Capital Accord: Making it Effective with Stronger Market Discipline’, European Financial Management, March 2002, pp. 103–15.

    Google Scholar 

  27. See BIS, ‘The New Basel Accord: Comments Received on the Second Consultative Package’, 21 August 2001.

    Google Scholar 

  28. See, for example, E. I. Altman, A. Resti and A. Sironi, The Link between Default and Recovery Rates: Effects on the Procyclicality of Regulatory Capital Ratios, BIS Working Papers, Basel, July 2002.

    Google Scholar 

  29. See, for example, Andrew Crockett, ‘Market Discipline and Financial Stability’, Journal of Banking & Finance, March 2002, pp. 977–87.

    Google Scholar 

  30. See, for example, Svein Gjerdrem, Governor, ‘Is the Financial System Stable?’, Economic Bulletin, Norges Bank, December 2001, pp. 127–33.

    Google Scholar 

  31. For example, Alan D. Morrison, The Economics of Capital Regulation in Financial Conglomerates, Working Paper, Oxford University, September 2002.

    Google Scholar 

  32. See Viral Acharya, Iftekhar Hasan and Anthony Saunders, Should Banks Be Diversified? Evidence from Individual Bank Loan Portfolios, BIS Working Paper, Basel, September 2002.

    Google Scholar 

  33. See, for example, Andrew Logan, The United Kingdom’s Small Banks’ Crisis of the Early 1990s: What Were the Leading Indicators of Failure?, Bank of England, Working Paper No. 139, London, July 2001.

    Google Scholar 

  34. See Jeremy Taylor, ‘A Unified Approach to Credit Limit Setting’, The RMA Journal (Philadelphia: The Risk Management Association, July/August 2002), pp. 56–61 and 72.

    Google Scholar 

  35. See Jason Kofman, ‘Capitalizing on Capital’, ERisk White Paper Series, October 2001, New York.

    Google Scholar 

  36. See, for example, Joseph W. May, ‘Watch Out for Those Collateral Constraints’, The RMA Journal, Philadelphia: The Risk Management Association, June 2002, pp. 52–3.

    Google Scholar 

  37. See Dietrich Domanski and Uwe Neumann, ‘Collateral in Wholesale Financial Markets’, BIS Quarterly Review, Basel, September 2001, pp. 57–64.

    Google Scholar 

  38. See Ralph C. Kimball, ‘Perils and Pitfalls in Risk Management’, Regional Review, The Federal Reserve Bank of Boston, 2nd quarter, 2000, p. 5.

    Google Scholar 

  39. John D. Hawke, Jr, Comptroller of the Currency, The Road to Basel II: Good Intentions and Imposing Challenges, Washington, DC, 6 June 2002.

    Google Scholar 

  40. See, for example, Kostas Tsatsaronis, ‘Special Feature: Hedge Funds’, BIS Quarterly Review, Basel, November 2000, pp. 61–71.

    Google Scholar 

  41. US General Accounting Office, Long Term Capital Management, Washington, DC, October 1999, p. 12.

    Google Scholar 

  42. See FSF, Report of the Working Group on Highly Leveraged Institutions Basel, 5 April 2000.

    Google Scholar 

  43. For an investigative article, see Michael Schroeder and Greg Ip, ‘Enron Spotlights a Gap in Laws: Energy Firm Lobbied Hard to Limit Oversight of Its Trading Operations’, The Wall Street Journal Europe 14–15 December 2001, pp. 11 and 16.

    Google Scholar 

  44. See, for example, William Poole, president and CEO of the Federal Reserve Bank of St. Louis, ‘Financial Stability’, Review, Federal Reserve Bank of St. Louis, September/October 2002, pp. 1–7.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Institute of Banking and Finance, University of Lausanne, Switzerland

    Zuhayr Mikdashi (Honorary Professor and Founder)

Authors
  1. Zuhayr Mikdashi
    View author publications

    You can also search for this author in PubMed Google Scholar

Copyright information

© 2003 Zuhayr Mikdashi

About this chapter

Cite this chapter

Mikdashi, Z. (2003). Prudential Regulatory Norms. In: Regulating the Financial Sector in the Era of Globalization. Palgrave Macmillan, London. https://doi.org/10.1057/9781403990112_3

Download citation

Publish with us

Policies and ethics

Search

Navigation