The Basel II Reform That Would Have Made Most Injections of Public Funds Unnecessary

The financial crisis has put great pressure on banks and led to a number of emergency measures intended to restore confidence in the banking system: tentative changes to accounting standards, recapitalisation of the banking industry, and higher capital requirements.

Author(s) :

Noel Amenc

Professor of Finance and Director of the EDHEC Risk and Asset Management Research Centre

Samuel Sender

Applied Research Manager at the EDHEC Risk and Asset Management Research Centre

Presentation :

Each measure targets a specific concern that has arisen during the crisis. Governments and regulators, however, have yet to deal with one of the essential causes of systemic risk: the inflexibility of prudential regulation for banking. As it happens, a single minor change would make it possible to restore much of the confidence in the banking sector without requiring any capital injections in the short term: acknowledging that banking capital ratios fall during downturns would have made most of the injections of public funds unnecessary. Making this change today would give governments far more room to support the real economy.
Pdf
The Basel II Reform That Would Have Made Most Injections of Public Funds Unneces...
(1.13 MB)
Type : Position paper
Date : le 15/01/2009
Research Cluster : Finance

See Also

- 06-04-2017
This week, to bring current and future challenges facing leaders directly to the classroom, the EDHEC Global MBA launches two 18-hour core courses devised and taught in collaboration with...
- 04-04-2017
The distinctive Multirank assessment ranks 1,500 prestigious schools and universities worldwide, including 74 French institutions.  EDHEC stands out in 2017 as the French business...
Frédéric Oudéa, Chief Executive Officer of Société Générale, meets EDHEC students
- 31-03-2017
Société Générale is one of the 3 banks in France’s CAC 40 stock index. The bank’s Chief...
- 30-03-2017
Close to 900 people attended the 9th edition of EDHEC Research Day held on Tuesday, 14 March 2017 on the EDHEC Lille Campus. We are very grateful for your interest and your role in the...