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On the role of regulatory banking capital

By Harald Benink, Jon Danielsson and Ásgeir Jónsson

Abstract

In this paper the authors study the role of regulatory banking capital and analyze the incentive effects of the Basel II Accord. They argue that Basel II may become a source of systemic risk due to endogenous risk and the risk sensitivity of the capital requirements. In this context they note that financial instability may enter via the asset side of the banks' balance sheets when banks are forced to sell assets in order to maintain the capital buffer prescribed by Basel II

Topics: HG Finance
Publisher: Wiley-Blackwell on behalf of the New York University Salomon Center
Year: 2008
DOI identifier: 10.1111/j.1468-0416.2007.00134.x
OAI identifier: oai:eprints.lse.ac.uk:32251
Provided by: LSE Research Online
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