Essays on The Development of Basel III in Comparison to Basel II Assignment

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The paper "The Development of Basel III in Comparison to Basel II" is an outstanding example of a finance and accounting assignment. The financial crisis in 2008-2009 affected the banking sector tremendously as there were bank failures and the incapability of the banks to deliver quality service and maintain transparency. The number of bank failures especially due to liquidity has made the world governing bodies look towards revising the capital adequacy requirements. This led to a change in capital requirements which has been provided in Basel III and the G20 summit increased pressure on banks to accept it.

The different core issues pertaining to Basel III are still being discussed but it looks mainly towards improving the attention towards implementation by making policies and strategies that ensure better compliance. The fact that the deadline to incorporate the changes pertaining to compliance has been kept at 2019 it is imperative that world bodies look towards achieving the capital and liquidity requirements before that for better compliance and monitoring of the activities. The objective of the Report This report looks to analyze the factors which have resulted in the development of Basel III and the differences it has in comparison to Basel II.

The paper further looks into different reasons which have made the banking regulations undergo changes and the changes and implications it will have for banks. This will thereby help to understand the manner in which the banking sector has evolved and the manner in which transparency, compliances and liquidity will be looked into. This will thereby help to understand the manner in which the working of the banking sector will improve and help to strengthen the banking regulations. Basel System Historically The Basel system started in 1992 after discussions that went on from 1988.

The Basel I came into operation in 1992 which required that banks ensure sufficient capital so that the losses could be absorbed and to develop a field where they competed internationally but avoided conflicts. This was corrected by developing Basel II norms which looked towards filling the regulatory arbitrage gap that existed.

References

Adrian, B. 2009. The Elephant in the Room: The Need to Deal with What Banks Do. OECD Journal: Financial Market Trends, vol. 2009/2

Gordy, M.B. 2003. A Risk-Factor Model Foundation For Ratings-Based Bank Capital Rules. Journal of Financial Intermediation, vol. 12

Jackson, P. 2009. Capital Requirements and Bank Behaviour: The Impact of the Basle Accord. Basle Committee on Banking Supervision Working Papers, No. 1

Kane, E.J. 2006. Basel II: a Contracting Perspective NBER Working Papers, 12705

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