International Prudential Regulation, Regulatory Risk and the Cost of Bank Capital

We define regulatory risk as any regulatory action that leads to an increase in the cost of capital for the regulated firm. In a general equilibrium setting the paper considers the impact of globally harmonising capital adequacy requirements on the cost of bank equity capital. The results show that uniform increases in capital requirements lead to an increase in the cost of capital. However when regulatory standards differ across countries, financial integration leads to positive spillovers which reduces the cost of capital mark up for a given increase in bank capital. Accordingly, regulatory risk may be greater under a regulatory agreement such as the Basel Accord which imposes international uniformity in capital ratios.

Endogenous Capital and Profitability in Banking

This paper investigates the relation between bank capital and profitability. To my knowledge, no previous paper has analysed this problem in a two-equation structural model. Contrary to what is reported with surprising frequency in this field of research, the results show no statistically significant relationship between capital and profitability. Given non-binding capital requirements this finding is consistent with the view that, while raising capital is costly for banks, it is associated with compensating benefits that offset these additional costs. Consequently, when capital structure is endogenously determined in a profit maximising equilibrium, no systematic relation between capital and profit is expected.

A Theory of Precautionary Regulatory Capital in Banking

The orthodox assumption in the banking literature is that capital requirements are a binding constraint on banking behaviour. This is in conflict with the empirical observation that banks hold a bu¤er of capital well in excess of the minimum requirements. This paper develops a model where capital is endogenously determined within a profit maximising equilibrium. Optimality involves balancing the reduction in expected costs associated with regulatory breach with the excess cost of financing from increasing capital. We demonstrate that when the equilibrium probability of regulatory breach is less than one half, banks are expected to hold precautionary capital.

Trace element contents of selected antarctic meteorites, 1

Data are reported for volatile/mobile Ag, As, Au, Bi, Cd, Co, Cs, Cu, Ga, In, Rb, Sb, Se, Te, T1 and Zn in exterior and/or interior samples of four Antarctic meteorites: 77005 (unique achondrite); 77257 (unreilite); 77278 (L3); 77299 (H3). Exterior samples reflect contamination and/or leaching by weathering but trace element (ppm-ppt) contents in interior samples seem reasonable for representatives of these rare meteoritic types. The 77005 achondrite seems related to shergottites; other samples extend compositional ranges previously known for their types. With suitable precautions, Antarctic meteorite finds yield trace element data as reliable as those obtained from previously known falls

Frustration Effects in Antiferromagnetic FCC Heisenberg Films

We study the effects of frustration in an antiferromagnetic film of FCC lattice with Heisenberg spin model including an Ising-like anisotropy. Monte Carlo (MC) simulations have been used to study thermodynamic properties of the film. We show that the presence of the surface reduces the ground state (GS) degeneracy found in the bulk. The GS is shown to depend on the surface in-plane interaction $J_s$ with a critical value at which ordering of type I coexists with ordering of type II. Near this value a reentrant phase is found. Various physical quantities such as layer magnetizations and layer susceptibilities are shown and discussed. The nature of the phase transition is also studied by histogram technique. We have also used the Green's function (GF) method for the quantum counterpart model. The results at low-$T$ show interesting effects of quantum fluctuations. Results obtained by the GF method at high $T$ are compared to those of MC simulations. A good agreement is observed.Comment: 11 pages, 19 figures, submitted to J. Phys.: Condensed Matte