Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements?
Most explanations of the crisis of 2007-2009 emphasize the role of the preceding boom in real estate and asset markets in a variety of advanced countries. As a result, an idea that is gaining support among various groups is how to make Basel II or...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2010/02/11738795/safe-sound-banking-role-countercyclical-regulatory-requirements http://hdl.handle.net/10986/19916 |
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okr-10986-19916 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING ACCOUNTING SYSTEMS ADVANCED COUNTRIES AGENCY PROBLEM ARBITRAGE ASSET MARKETS ASSET PRICE ASSET PRICES ASSET SALES AUDITORS BAILOUT BALANCE SHEET BALANCE SHEETS BANK BANK ASSETS BANK BEHAVIOR BANK CREDITORS BANK LOAN BANK LOANS BANK MANAGEMENT BANK OF SPAIN BANK POLICY BANK REGULATION BANK RISK TAKING BANK SUPERVISION BANK SUPERVISORS BANKER BANKERS BANKING BANKING CRISIS BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKS BASIS POINTS BILLS OF EXCHANGE BINDING CONSTRAINT BIS BORROWER BUSINESS CYCLE BUSINESS CYCLES CAPITAL CAPITAL RATIO CAPITAL RATIOS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CDS CENTRAL BANKING CENTRAL BANKS COLLATERAL COMMERCIAL BANKS COMMERCIAL CREDIT COMMON CURRENCY AREAS COMMUNICATION COMPLEX SECURITIES CONSUMPTION CORPORATE GOVERNANCE CORPORATE PAPER COST OF CREDIT CREDIT CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT EXPANSION CREDIT GROWTH CREDIT LINES CREDIT MARKETS CREDIT RATING CREDIT RATING AGENCIES CREDIT RATINGS CREDIT RISK CREDITORS CREDITWORTHY BORROWERS CURRENCIES CURRENCY CURRENT PRICES DEBT DEBTORS DEFAULT PREMIUM DEFAULT PROBABILITIES DEPOSIT DEPOSIT INSURANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMICS EMERGING MARKET EMERGING MARKET DEBT EUROPEAN CENTRAL BANK EXCHANGE FACE AMOUNT FACE VALUE FACTORS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF ATLANTA FIDUCIARY STANDARDS FINANCE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCING FORECASTING FORMAL FINANCIAL SECTOR FORMS OF DEBT FUND MANAGERS FUTURE GLOBAL BANKING GOOD GOVERNANCE GOVERNMENT FUNDS GOVERNMENT SPENDING GOVERNMENTS HOLDING HOLDINGS HOME OWNERSHIP HOUSING HOUSING PRICES INCOME INDUSTRIAL COUNTRIES INFORMATION INFORMATION ASYMMETRIES INSTRUMENTS INSURANCE AGENCY INTEREST INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INVESTMENT INVESTMENT BANKS INVESTMENT VEHICLES INVESTORS LAND LAWS LEGISLATION LENDING LIQUID ASSETS LIQUIDITY LOAN LOAN OFFICERS LOAN PROVISIONING LOANS LONG-TERM INTEREST MARKET PARTICIPANTS MARKET RISKS MARKETS MATURITY MATURITY MISMATCHES MINIMUM CAPITAL REQUIREMENTS MONETARY AUTHORITIES MONETARY POLICY MONEY SUPPLY MORAL SUASION MORTGAGE MORTGAGE BROKERS MORTGAGE MARKET NET WORTH NONBANKS OPTION OPTIONS PAYMENT PAYMENT OF INTEREST PENSION PENSION FUNDS PHYSICAL CAPITAL PORTFOLIO PRESENT VALUE PRICE STABILITY PRICE VOLATILITY PRICING PRINCIPAL PRIVATE SECTOR DEVELOPMENT PROBABILITY OF DEFAULT PROFITS PRUDENTIAL REGULATION PUBLIC DEBT RATE OF RETURN RATES OF RETURN RATING AGENCIES REAL ESTATE RECESSION RECESSIONS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY FRAMEWORK REGULATORY POLICY REGULATORY REGIME REGULATORY REQUIREMENTS REGULATORY STANDARDS REGULATORY SYSTEM RISK RISK AVERSION RISK EXPOSURE RISK EXPOSURES RISK PREMIA RISK PROFILES RISK TAKING RISK WEIGHTS RISK-BASED PRICING SAFETY NETS SAVINGS SAVINGS BANK SECURITIES SECURITIZATION SHARE SHAREHOLDERS SPECULATIVE BUBBLES STOCK SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY POWERS SYSTEMIC RISK TOTAL DEBT TRACK RECORD TRANSACTIONS TRANSACTIONS COSTS UNEMPLOYMENT UNEMPLOYMENT RATES USURY VALUE VALUE OF COLLATERAL |
| spellingShingle |
ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING ACCOUNTING SYSTEMS ADVANCED COUNTRIES AGENCY PROBLEM ARBITRAGE ASSET MARKETS ASSET PRICE ASSET PRICES ASSET SALES AUDITORS BAILOUT BALANCE SHEET BALANCE SHEETS BANK BANK ASSETS BANK BEHAVIOR BANK CREDITORS BANK LOAN BANK LOANS BANK MANAGEMENT BANK OF SPAIN BANK POLICY BANK REGULATION BANK RISK TAKING BANK SUPERVISION BANK SUPERVISORS BANKER BANKERS BANKING BANKING CRISIS BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKS BASIS POINTS BILLS OF EXCHANGE BINDING CONSTRAINT BIS BORROWER BUSINESS CYCLE BUSINESS CYCLES CAPITAL CAPITAL RATIO CAPITAL RATIOS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CDS CENTRAL BANKING CENTRAL BANKS COLLATERAL COMMERCIAL BANKS COMMERCIAL CREDIT COMMON CURRENCY AREAS COMMUNICATION COMPLEX SECURITIES CONSUMPTION CORPORATE GOVERNANCE CORPORATE PAPER COST OF CREDIT CREDIT CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT EXPANSION CREDIT GROWTH CREDIT LINES CREDIT MARKETS CREDIT RATING CREDIT RATING AGENCIES CREDIT RATINGS CREDIT RISK CREDITORS CREDITWORTHY BORROWERS CURRENCIES CURRENCY CURRENT PRICES DEBT DEBTORS DEFAULT PREMIUM DEFAULT PROBABILITIES DEPOSIT DEPOSIT INSURANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMICS EMERGING MARKET EMERGING MARKET DEBT EUROPEAN CENTRAL BANK EXCHANGE FACE AMOUNT FACE VALUE FACTORS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF ATLANTA FIDUCIARY STANDARDS FINANCE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCING FORECASTING FORMAL FINANCIAL SECTOR FORMS OF DEBT FUND MANAGERS FUTURE GLOBAL BANKING GOOD GOVERNANCE GOVERNMENT FUNDS GOVERNMENT SPENDING GOVERNMENTS HOLDING HOLDINGS HOME OWNERSHIP HOUSING HOUSING PRICES INCOME INDUSTRIAL COUNTRIES INFORMATION INFORMATION ASYMMETRIES INSTRUMENTS INSURANCE AGENCY INTEREST INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INVESTMENT INVESTMENT BANKS INVESTMENT VEHICLES INVESTORS LAND LAWS LEGISLATION LENDING LIQUID ASSETS LIQUIDITY LOAN LOAN OFFICERS LOAN PROVISIONING LOANS LONG-TERM INTEREST MARKET PARTICIPANTS MARKET RISKS MARKETS MATURITY MATURITY MISMATCHES MINIMUM CAPITAL REQUIREMENTS MONETARY AUTHORITIES MONETARY POLICY MONEY SUPPLY MORAL SUASION MORTGAGE MORTGAGE BROKERS MORTGAGE MARKET NET WORTH NONBANKS OPTION OPTIONS PAYMENT PAYMENT OF INTEREST PENSION PENSION FUNDS PHYSICAL CAPITAL PORTFOLIO PRESENT VALUE PRICE STABILITY PRICE VOLATILITY PRICING PRINCIPAL PRIVATE SECTOR DEVELOPMENT PROBABILITY OF DEFAULT PROFITS PRUDENTIAL REGULATION PUBLIC DEBT RATE OF RETURN RATES OF RETURN RATING AGENCIES REAL ESTATE RECESSION RECESSIONS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY FRAMEWORK REGULATORY POLICY REGULATORY REGIME REGULATORY REQUIREMENTS REGULATORY STANDARDS REGULATORY SYSTEM RISK RISK AVERSION RISK EXPOSURE RISK EXPOSURES RISK PREMIA RISK PROFILES RISK TAKING RISK WEIGHTS RISK-BASED PRICING SAFETY NETS SAVINGS SAVINGS BANK SECURITIES SECURITIZATION SHARE SHAREHOLDERS SPECULATIVE BUBBLES STOCK SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY POWERS SYSTEMIC RISK TOTAL DEBT TRACK RECORD TRANSACTIONS TRANSACTIONS COSTS UNEMPLOYMENT UNEMPLOYMENT RATES USURY VALUE VALUE OF COLLATERAL Caprio, Gerard, Jr. Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? |
| relation |
Policy Research Working Paper;No. 5198 |
| description |
Most explanations of the crisis of
2007-2009 emphasize the role of the preceding boom in real
estate and asset markets in a variety of advanced countries.
As a result, an idea that is gaining support among various
groups is how to make Basel II or any regulatory regime less
pro-cyclical. This paper addresses the rationale for and
likely contribution of such policies. Making provisioning
(or capital) requirements countercyclical is one way
potentially to address pro-cyclicality, and accordingly it
looks at the efforts of the authorities in Spain and
Colombia, two countries in which countercyclical
provisioning has been tried, to see what the track record
has been. As explained there, these experiments have been at
best too recent and limited to put much weight on them, but
they are much less favorable for supporting this practice
than is commonly admitted. The paper then addresses concerns
and implementation issues with countercyclical capital or
provisioning requirements, including why their impact might
be expected to be limited, and concludes with
recommendations for developing country officials who want to
learn how to make their financial systems less exposed to crises. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Caprio, Gerard, Jr. |
| author_facet |
Caprio, Gerard, Jr. |
| author_sort |
Caprio, Gerard, Jr. |
| title |
Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? |
| title_short |
Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? |
| title_full |
Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? |
| title_fullStr |
Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? |
| title_full_unstemmed |
Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? |
| title_sort |
safe and sound banking : a role for countercyclical regulatory requirements? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2010/02/11738795/safe-sound-banking-role-countercyclical-regulatory-requirements http://hdl.handle.net/10986/19916 |
| _version_ |
1764444046772666368 |
| spelling |
okr-10986-199162021-04-23T14:03:52Z Safe and Sound Banking : A Role for Countercyclical Regulatory Requirements? Caprio, Gerard, Jr. ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING ACCOUNTING SYSTEMS ADVANCED COUNTRIES AGENCY PROBLEM ARBITRAGE ASSET MARKETS ASSET PRICE ASSET PRICES ASSET SALES AUDITORS BAILOUT BALANCE SHEET BALANCE SHEETS BANK BANK ASSETS BANK BEHAVIOR BANK CREDITORS BANK LOAN BANK LOANS BANK MANAGEMENT BANK OF SPAIN BANK POLICY BANK REGULATION BANK RISK TAKING BANK SUPERVISION BANK SUPERVISORS BANKER BANKERS BANKING BANKING CRISIS BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKS BASIS POINTS BILLS OF EXCHANGE BINDING CONSTRAINT BIS BORROWER BUSINESS CYCLE BUSINESS CYCLES CAPITAL CAPITAL RATIO CAPITAL RATIOS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CDS CENTRAL BANKING CENTRAL BANKS COLLATERAL COMMERCIAL BANKS COMMERCIAL CREDIT COMMON CURRENCY AREAS COMMUNICATION COMPLEX SECURITIES CONSUMPTION CORPORATE GOVERNANCE CORPORATE PAPER COST OF CREDIT CREDIT CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT EXPANSION CREDIT GROWTH CREDIT LINES CREDIT MARKETS CREDIT RATING CREDIT RATING AGENCIES CREDIT RATINGS CREDIT RISK CREDITORS CREDITWORTHY BORROWERS CURRENCIES CURRENCY CURRENT PRICES DEBT DEBTORS DEFAULT PREMIUM DEFAULT PROBABILITIES DEPOSIT DEPOSIT INSURANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMICS EMERGING MARKET EMERGING MARKET DEBT EUROPEAN CENTRAL BANK EXCHANGE FACE AMOUNT FACE VALUE FACTORS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF ATLANTA FIDUCIARY STANDARDS FINANCE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCING FORECASTING FORMAL FINANCIAL SECTOR FORMS OF DEBT FUND MANAGERS FUTURE GLOBAL BANKING GOOD GOVERNANCE GOVERNMENT FUNDS GOVERNMENT SPENDING GOVERNMENTS HOLDING HOLDINGS HOME OWNERSHIP HOUSING HOUSING PRICES INCOME INDUSTRIAL COUNTRIES INFORMATION INFORMATION ASYMMETRIES INSTRUMENTS INSURANCE AGENCY INTEREST INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INVESTMENT INVESTMENT BANKS INVESTMENT VEHICLES INVESTORS LAND LAWS LEGISLATION LENDING LIQUID ASSETS LIQUIDITY LOAN LOAN OFFICERS LOAN PROVISIONING LOANS LONG-TERM INTEREST MARKET PARTICIPANTS MARKET RISKS MARKETS MATURITY MATURITY MISMATCHES MINIMUM CAPITAL REQUIREMENTS MONETARY AUTHORITIES MONETARY POLICY MONEY SUPPLY MORAL SUASION MORTGAGE MORTGAGE BROKERS MORTGAGE MARKET NET WORTH NONBANKS OPTION OPTIONS PAYMENT PAYMENT OF INTEREST PENSION PENSION FUNDS PHYSICAL CAPITAL PORTFOLIO PRESENT VALUE PRICE STABILITY PRICE VOLATILITY PRICING PRINCIPAL PRIVATE SECTOR DEVELOPMENT PROBABILITY OF DEFAULT PROFITS PRUDENTIAL REGULATION PUBLIC DEBT RATE OF RETURN RATES OF RETURN RATING AGENCIES REAL ESTATE RECESSION RECESSIONS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY FRAMEWORK REGULATORY POLICY REGULATORY REGIME REGULATORY REQUIREMENTS REGULATORY STANDARDS REGULATORY SYSTEM RISK RISK AVERSION RISK EXPOSURE RISK EXPOSURES RISK PREMIA RISK PROFILES RISK TAKING RISK WEIGHTS RISK-BASED PRICING SAFETY NETS SAVINGS SAVINGS BANK SECURITIES SECURITIZATION SHARE SHAREHOLDERS SPECULATIVE BUBBLES STOCK SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY POWERS SYSTEMIC RISK TOTAL DEBT TRACK RECORD TRANSACTIONS TRANSACTIONS COSTS UNEMPLOYMENT UNEMPLOYMENT RATES USURY VALUE VALUE OF COLLATERAL Most explanations of the crisis of 2007-2009 emphasize the role of the preceding boom in real estate and asset markets in a variety of advanced countries. As a result, an idea that is gaining support among various groups is how to make Basel II or any regulatory regime less pro-cyclical. This paper addresses the rationale for and likely contribution of such policies. Making provisioning (or capital) requirements countercyclical is one way potentially to address pro-cyclicality, and accordingly it looks at the efforts of the authorities in Spain and Colombia, two countries in which countercyclical provisioning has been tried, to see what the track record has been. As explained there, these experiments have been at best too recent and limited to put much weight on them, but they are much less favorable for supporting this practice than is commonly admitted. The paper then addresses concerns and implementation issues with countercyclical capital or provisioning requirements, including why their impact might be expected to be limited, and concludes with recommendations for developing country officials who want to learn how to make their financial systems less exposed to crises. 2014-09-02T17:17:30Z 2014-09-02T17:17:30Z 2010-02 http://documents.worldbank.org/curated/en/2010/02/11738795/safe-sound-banking-role-countercyclical-regulatory-requirements http://hdl.handle.net/10986/19916 English en_US Policy Research Working Paper;No. 5198 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |