Basel Compliance and Financial Stability

Basel Compliance and Financial Stability PDF

Author: Mohammad Bitar

Publisher: International Monetary Fund

Published: 2017-07-18

Total Pages: 40

ISBN-13: 1484309219

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The paper provides robust evidence that compliance with Basel Core Principles (BCPs) has a strong positive effect on the Z-score of conventional banks, albeit less pronounced on the Zscore of Islamic banks. Using a sample of banks operating in 19 developing countries, the results appear to be driven by capital ratios, a component of Z-score for the two types of banks. Even though smaller on Islamic banks, individual chapters of BCPs also suggest a positive effect on the stability of conventional banks. The findings support the effective role of BCP standards in improving bank stability, whose important implications led to the Islamic Financial Services Board (IFSB) publication of new recommendations in 2015 to bring BCP standards in line with the Core Principles for Islamic Finance Regulation (CPIFRs) standards. Our findings suggest that because Islamic banks are benchmarked closely to BCPs, the implementation of CPFIRs should also positively affect their stability.

Financial System Standards and Financial Stability

Financial System Standards and Financial Stability PDF

Author: Mr.Dewitt Marston

Publisher: International Monetary Fund

Published: 2001-05-01

Total Pages: 36

ISBN-13: 1451964749

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The relationship between the observance of financial system standards and financial stability is complex owing to the multitude of macroeconomic and structural factors affecting stability. Therefore, assessments of standards in terms of technical criteria for compliance needs to be reinforced with additional information on other factors affecting risks in order to assess financial stability. Preliminary evidence from country data on observance of Basel Core Principles (BCPs) suggests that indicators of credit risk and bank soundness are primarily influenced by macroeconomic and macroprudential factors and that the direct influence of compliance with Basel Core Principles on credit risk and soundness is insignificant. BCP compliance could, however, influence risk and soundness indirectly through its influence on the impact of other macro variables.

Basel Compliance and Financial Stability

Basel Compliance and Financial Stability PDF

Author: Mohammad Bitar

Publisher: International Monetary Fund

Published: 2017-07-18

Total Pages: 40

ISBN-13: 1484311507

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The paper provides robust evidence that compliance with Basel Core Principles (BCPs) has a strong positive effect on the Z-score of conventional banks, albeit less pronounced on the Zscore of Islamic banks. Using a sample of banks operating in 19 developing countries, the results appear to be driven by capital ratios, a component of Z-score for the two types of banks. Even though smaller on Islamic banks, individual chapters of BCPs also suggest a positive effect on the stability of conventional banks. The findings support the effective role of BCP standards in improving bank stability, whose important implications led to the Islamic Financial Services Board (IFSB) publication of new recommendations in 2015 to bring BCP standards in line with the Core Principles for Islamic Finance Regulation (CPIFRs) standards. Our findings suggest that because Islamic banks are benchmarked closely to BCPs, the implementation of CPFIRs should also positively affect their stability.

Basel Core Principles and Bank Risk

Basel Core Principles and Bank Risk PDF

Author: Ms.Enrica Detragiache

Publisher: International Monetary Fund

Published: 2010-03-01

Total Pages: 29

ISBN-13: 1451982674

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This paper studies whether compliance with the Basel Core Principles for effective banking supervision (BCPs) is associated with bank soundness. Using data for over 3,000 banks in 86countries, we find that neither the overall index of BCP compliance nor its individual components are robustly associated with bank risk measured by Z-scores. We also fail to find a relationship between BCP compliance and systemic risk measured by a system-wide Zscore.

Financial System Standards and Financial Stability: the Case of Basel Core Principles

Financial System Standards and Financial Stability: the Case of Basel Core Principles PDF

Author: David Marston

Publisher:

Published: 2001-05-01

Total Pages: 36

ISBN-13: 9781283554459

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The relationship between the observance of financial system standards and financial stability is complex owing to the multitude of macroeconomic and structural factors affecting stability. Therefore, assessments of standards in terms of technical criteria for compliance needs to be reinforced with additional information on other factors affecting risks in order to assess financial stability. Preliminary evidence from country data on observance of Basel Core Principles (BCPs) suggests that indicators of credit risk and bank soundness are primarily influenced by macroeconomic and macroprudential factors and that the direct influence of compliance with Basel Core Principles on credit risk and soundness is insignificant. BCP compliance could, however, influence risk and soundness indirectly through its influence on the impact of other macro variables.

Financial System Standards and Financial Stability

Financial System Standards and Financial Stability PDF

Author: V. Sundararajan

Publisher:

Published: 2006

Total Pages: 35

ISBN-13:

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The relationship between the observance of financial system standards and financial stability is complex owing to the multitude of macroeconomic and structural factors affecting stability. Assessments of standards need to be interpreted using information on other factors affecting risks. Preliminary evidence from data on observance of Basel Core Principles (BCP) suggests that credit risk and bank soundness are primarily influenced by macroeconomic and macroprudential factors and that direct influence of compliance with BCP on credit risk and soundness is insignificant. Compliance could, however, have a sizable indirect influence through its impact on the marginal effect on soundness of macro factors.

Global Financial Stability Report, April 2012

Global Financial Stability Report, April 2012 PDF

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2012-04-18

Total Pages: 94

ISBN-13: 1616352477

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The April 2012 Global Financial Stability Report assesses changes in risks to financial stability over the past six months, focusing on sovereign vulnerabilities, risks stemming from private sector deleveraging, and assessing the continued resilience of emerging markets. The report probes the implications of recent reforms in the financial system for market perception of safe assets, and investigates the growing public and private costs of increased longevity risk from aging populations.

Banking on the Principles

Banking on the Principles PDF

Author: Mr.Thierry Tressel

Publisher: International Monetary Fund

Published: 2006-10-01

Total Pages: 35

ISBN-13: 1451865023

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This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness. The authors find a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision2. Specifically, countries that require banks to regularly and accurately report their financial data to regulators and market participants have sounder banks. This relationship is robust to controlling for broad indexes of institutional quality, macroeconomic variables, sovereign ratings, and reverse causality. Measuring soundness through Z-scores yields similar results. These findings emphasize the importance of transparency in making supervisory processes effective and strengthening market discipline. Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the core principles.

Governance of International Banking

Governance of International Banking PDF

Author: Dirk Schoenmaker

Publisher: Oxford University Press

Published: 2013-03-05

Total Pages: 238

ISBN-13: 0199971617

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Global governance of international banks is breaking down after the Great Financial Crisis, as national regulators are withdrawing on their home turf. New evidence presented illustrates that the global systemically important banks underpin the global financial system. This book offers solutions for the effective governance of global banks.

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