The application of the German model of company law to the banking sector: A private law measure to avert systemic risk (original) (raw)

On the need of special rules dealing with bank insolvencies 1

2000

Contrary to literature on the prevention of bank crisis which is very developed, literature on bank resolution policies and insolvency law is still relatively small even if academic interest is growing. Because of the systemic repercussions of bank crisis which can dramatically affect both financial and real sectors, banks are subject to specific supervision and regulation by prudential authorities. The

Current Problems of Banking Supervision and Regulation: A New Evidence

European Research Studies Journal Volume XXI, Issue 4, 2018 pp. 40-54, 2018

At present, in the era of globalization, the banking sector failure in one country can cause negative externalities for the financial institutions of other states. The fundamental problem of implementing standards based on Basel II is that these standards contribute to the development of pro-cyclicality of banking regulation. The authors emphasize the need to design such a regulatory system, which should contribute to innovative development and at the same time restrain socially dubious novelties. Therefore, the article substantiates the need to increase the size of the capital "buffer", which is intended to address the problem of improving the financial situation and increasing the financial viability of the largest banks and banking systems. This reduces risks and increases the capital "safety cushion", as well as optimizes the impact on the commercial banks behavior caused by the use of counter-cyclical capital regulation requirements. The conducted research supported the hypothesis put forward by the authors that when forming a countercyclical capital buffer it is necessary to focus on indicators of: return on assets of the banking system (ROА) and return on equity (ROE), depending on GDP growth, but this dependence does not become evident immediately, but with a time lag of 1 year. The object of the research is the banking system of Russia.

Some lessons for bank regulation from recent crises

2000

The causes of systemic bank distress are complex and multi-dimensional involving economic, financial, regulatory and structural weaknesses. This also means that regulatory approaches also need to be multi-dimensional. The paper suggests that an optimum "regulatory regime" needs to incorporate seven key components: regulation (the rules imposed by official agencies), official supervision, incentive structures within banks, market discipline, intervention arrangements in the event of distress, corporate governance arrangements with banks, and the accountability of regulatory agencies. All are necessary but none alone are sufficient for systemic stability. As there are trade-offs between the components, regulatory strategy needs to focus on the overall impact of the regime rather than only the regulation component.

Commercial Banks’ Capital Adequacy and Supervision Review of International Regulations and Practices

International Journal of Accounting Research

The aim of this paper was to review the internatinal regulations and practices with respect to capital adequacy and supervision, with special focus on moral hazard hypothesis and commercial banks' excessive risk teching behaviour. The result of the review highlights the evolvment of theoretical debates with respect to the adequacy of capital to be maintained by commercial banks operating in a given country. The debate is due to the fact that banks having high amount of capital may dare to take excessive risks, which leads to the concept of moral hazard hypothesis as a source of banking or financial crisis. On the other hand, banks having less amount of capital, below the minimum capital adequacy ratio set by either of the Basel accords of I, II and III, cannot sustain negative shocks of unforced financial crisis in an economy. as a result, the current banking literature suggests the revision of the Basel accords I & II towards the Basel accord III that incorporates a capital conservation buffer and a countercyclical buffer apart from the minimum capital requirements. Further, constraints towards this end has been raised in the literature as regulators capacity constraints related to lack of skills such as the ability to evaluate the quality of bank management and forensic accounting, are found sever in developing countries. Eventually, this paper suggests the remedial actions towards alleviating such constraints in the future.

The New Approach for Risk Regulation in Banks

Chinese Business Review

The purpose of this report is to present the necessity of proceeding to new reforms in bank regulation and to increase the stability and risk sensitivity of the capital base under applying the Standardised Credit Risk Assessment Approach (SCRA) in banks. The dynamics in the bank regulation and supervision of credit risk assessment approaches are explored. In the paper, a thorough theoretical-methodological and historical-logical analysis was made of the evolution of the development and chronology of the global regulatory frameworks for banks-Basel 1, Basel 2, and Basel 3. The contemporary projections and challenges for the banks' management under the new regulatory and institutional changes are presented. The SCRA is a positive asset in bank capital regulation in contemporary banking. The revisions to the regulatory framework by Basel 3 are a long continuous process influenced by numerous economic, social, and political factors. The preparation of the Bulgarian banking system for a new reform of financial regulation is analyzed. The need for adoption of a new risk-based approach for capital assessment and the importance of transparency in bank financial reporting is proved.

Some Lessons for Regulation from Recent Bank Crises

The New Architecture of the International Monetary System, 2000

"regulatory regime,'' which is a wider concept than the set of prudential principles and business rules established by external regulatory agencies. The role of external regulation in fostering a safe and sound banking system is limited. The incentive's structure for private banks and the efficiency of monitoring and supervision have to play a great role. Liberalization of markets can have bad effects in the transitional period, but advantages can be enormous after the system starts to work correctly. The main lesson of recent bank crises is that there needs to be more effective surveillance of financial institutions both by supervisory authorities and by markets. Effective regulation (internal and external) and supervision of banks and financial institutions have the potential to give a major contribution to the stability and robustness of financial system.

The German banking system : legal foundations and recent trends

1987

crisis of the thirties that many countries adopted legislation introducing the principle of strict separation of commercial and investment banking activities. One of the most "draconian" of these pieces of legislation is the well known Glass-Steagall Banking Act passed by the U.S. Congress in 1933. Although German banks were deeply shaken by the bank crisis of 1931, the Reichsgesetz iiber das Kreditwesen of December 5, 1934-the first comprehensive statute regulating the banking system in Germany-did not 2) abandon the principle of universal banking. On the contrary, German bankers, analysts and scholars unanimously share the belief that the universal banking system is far more efficient _ , 3) and stable than a specialized banking system. This belief seems to be supported by the fact that the stream of financial innovation experienced in recent years in most Western industrialized countries has left Germany almost unaffected and, in any case, has not given rise to the feelings of deep concern and apprehension-widespread in many other countries-for the stability of the financial system. At the same time, the economic performance of West Germany has been highly satisfactory in the past few decades. The links between financial innovation and the principle of universal banking will be explored in this paper in order to test the optimism of German experts mentioned above. The task of analyzing the legal framework of the German banking system becomes more interesting if we also consider the fact that in 2) See K.