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Basel Iii: Redesigned Regulatory Framework For Banks

Author

Listed:
  • Jelena Birovljev

    (University of Novi Sad, Faculty of Economics Subotica)

  • Milivoje Davidović

    (University of Novi Sad, Faculty of Economics Subotica)

  • Biljana Štavljanin

    (University of Novi Sad, Faculty of Economics Subotica)

Abstract

The global financial crisis has confirmed the global regulatory mechanism weakness in the prevention of the causes and consequences in stress situations. As an expression of inadequacy, Basel Committee designed Basel III standard as a new regulatory framework for banks. Its implementation involves the compliance of strict capital requirements, liquidity standards and leverage. Researches about the effects of Basel III standards indicate that a shorter time horizon, these are the consequences for economic growth is greater. For the four-year implementation period, the increase in capital requirements for the 1% would result in a reduction in global GDP by 0.1%, while the largest drop in GDP would be recorded after 18th quarter and amounted to 0.19%. Also, during the implementation horizon cross-country spillover effect will occur that would be stronger in developing countries relative to developed countries and amounted to 0.03%. Based on the above, pure effect of increasing capital requirements on the reduction of world GDP is estimated to 0.016%.

Suggested Citation

  • Jelena Birovljev & Milivoje Davidović & Biljana Štavljanin, 2012. "Basel Iii: Redesigned Regulatory Framework For Banks," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, issue 3-4, pages 140-148, April.
    • Handle: RePEc:srb:journl:y:2012:i:3-4:p:140-148
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    More about this item

    Keywords

    Basel III; capital adequacy; capital conservation buffer; countercyclical buffer; leverage ratio; liquidity standards;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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