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The main theoretical aspects regarding the capital adequacy models

Author

Listed:
  • Constantin ANGHELACHE

    (Bucharest University of Economic Studies, Romania)

  • Dana Luiza GRIGORESCU

    (Bucharest University of Economic Studies, Romania)

  • Ștefan Gabriel DUMBRAVĂ

    (Bucharest University of Economic Studies, Romania)

Abstract

The credit institutions shall apply the measurement approach to a lesser extent to determine capital adequacy. The Basel Accords pay attention to this very aspect of capital sizing in order to be able to finance economic activities, but especially to reduce the effect of the risks caused by capital inadequacy. This study can be performed using statistical-econometric models, based on which to estimate the establishment of the necessary capital. If capital is not adequate (brought to the size of market demand), a number of risks arise that disrupt credit-based financing. Although many credit institutions have chosen the simplest method for determining the capital requirement for operational risk, efforts must be made to use the “standard approach”, thus ensuring the premises for the transition to the “advanced approach”, considered the effective form of operational risk monitoring.

Suggested Citation

  • Constantin ANGHELACHE & Dana Luiza GRIGORESCU & Ștefan Gabriel DUMBRAVĂ, 2020. "The main theoretical aspects regarding the capital adequacy models," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(624), A), pages 261-270, Autumn.
    • Handle: RePEc:agr:journl:v:3(624):y:2020:i:3(624):p:261-270
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    References listed on IDEAS

    as
    1. Carolyn Currie, 2004. "The Potential Effect of the New Basel Operational Risk Capital Requirements," Working Paper Series 137, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    2. Gareth W. Peters & Pavel V. Shevchenko & Mario V. Wuthrich, 2009. "Dynamic operational risk: modeling dependence and combining different sources of information," Papers 0904.4074, arXiv.org, revised Jul 2009.
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    5. Mădălina Gabriela ANGHEL & Constantin ANGHELACHE & Daniel DUMITRESCU, 2016. "Investment funds and portfolio of loan guarantees as financial steps proposals to support innovative Small and Medium Enterprises," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(608), A), pages 119-126, Autumn.
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