The IMF working paper, "Good Supervision: lessons from the field," examines the effectiveness of On-site Inspections (OSIs) as a supervisory tool in advanced economies (AEs), drawing insights from 60 Basel Core Principles (BCPs) assessments conducted between 2012 and June 2023. Despite their...

This paper examines the relationship between capital requirements, capital ratios and bank competitiveness - measured as profit efficiency. Using data envelopment analysis techniques, profit efficiency scores were estimated for a sample of listed significant institutions directly supervised by...

External ratings (agency ratings) and internal ratings were already in use before Basel II, as powerful management tools. Basel II "adopts" them (the former in the Standard approach, the latter in the IRB approaches) in a productive way: internal ratings represent the final summary of the...

Since 2014, several countries have implemented the Basel III countercyclical capital buffer (CCyB) to enhance the banking sector's resilience against risks arising from excessive credit growth. We analyze the CCyB decision-making process of macroprudential authorities across Europe. Our findings...

The literature on large-scale urban development projects often primarily addresses drastic failures and their underlying causes. Recently, however, success factors have also received increasing attention. From both perspectives, management approaches, participation logics and political...

The purpose of this paper is to empirically examine the effects of capital and liquidity on bank stability as well as the existence of a potential complementary or substitute relationship between both dimensions to explain bank stability. We use a sample of 16,061 banks from 27 countries during...

A key element of the Basel III reforms are stricter capital requirements, which have been im- plemented with varying degrees of stringency across jurisdictions. We examine the impact of these requirements on bank profitability in the US and Europe between 2019 and 2024. We find no evidence that...

What leads self-employed entrepreneurs to incorporate? I examine how tax incentives interact with the cost of incorporation to answer this question. I exploit the abolition of minimum capital requirements to set up a limited liability company in the Netherlands and compare entrepreneurs that...

This paper examines the benefits and implementation challenges of the newly revised Basel Core Principles (BCPs) for effective banking supervision. It outlines the rationale for the 2024 reform led by the Basel Committee on Banking Supervision (BCBS), highlights key enhancements, and provides...

We examine the evolution of equity capital in the U.S. banking industry over the past 35 years. Earnings are the major driver of increases in equity capital in the banking industry. While common stock issuance is frequent, amounts issued are generally small and do not contribute meaningfully to...

This paper presents the first causal evidence on how banks adjust their voluntary capital buffers (the capital headroom above the required level) in response to changes in capital requirements. Using granular euro area data and exploiting the threshold-based assignment of Other Systemically...

This paper explores the interplay between the risk- and leverage-based prudential and the resolution frameworks within the EU banking system. The prudential framework is designed to enhance the resilience of both individual banks and the banking sector as a whole. It does so by imposing minimum...

The Prudential Regulation has raised the issue of estimation errors due to Internal Rating Based (IRB) estimation process that may produce underestimation of the risk measures. In the context of credit risk, lower bounds (i.e. floors) for the estimated parameters are introduced to limit the...

The report sets out the impact of the Basel III framework, including the December 2017 finalisation of the Basel III reforms and the January 2019 finalisation of the market risk framework. A web-based version of the report with interactive graphs is available on the highlights page. Dashboards...

The Committee has revised its principles for the management of credit risk (Credit Risk Principles). These principles provide guidelines for banking supervisory authorities to evaluate banks' credit risk management processes in four key areas: (i) establishing a suitable credit risk environment;...

Through its Regulatory Consistency Assessment Programme (RCAP), the Basel Committee monitors the timely adoption of regulations by its members, assesses the regulations' consistency with the Basel Framework and examines the consistency of banks' calculation of the prudential ratios across...

Through its Regulatory Consistency Assessment Programme (RCAP), the Basel Committee monitors the timely adoption of regulations by its members, assesses the regulations' consistency with the Basel Framework and examines the consistency of banks' calculation of the prudential ratios across...

This paper examines the existence and magnitude of an "LCR premium" in Peru's interbank market by exploiting the July 1, 2019 reform that eliminated the punitive outflow weights on repo collateral under the Liquidity Coverage Ratio (LCR). Using daily transactions from January 2019 to February...

The IMF Caribbean Regional Technical Assistance Centre (CARTAC) conducted two technical assistance (TA) missions in the Turks and Caicos Islands (TCI) between January and March 2024. The missions aimed to strengthen the financial stability framework of the Turks and Caicos Islands Financial...

Banks predominantly issue nondilutive CoCos, contrary to the suggestion that CoCos should be dilutive to reduce risk-taking. In an agency model of two moral hazards, we show that, although dilutive CoCos deter ex ante risk-taking and prevent banks from being undercapitalized, penalizing...

This paper attempts to develop a framework for implementing the Countercyclical Capital Buffer (CCyB) in Mongolia's banking sector by identifying early warning indicators of systemic risk and examining the impact of capital adequacy on bank lending. Using quarterly data from 2000 to 2024, the...

This paper studies how banks manage their equity capital in the short run, particularly during periods of distress, based on Basel III monitoring data. The findings challenge the conventional assumption that bank capital is largely exogenous in the short run, meaning that banks cannot adjust...