IDEAS home Printed from https://ideas.repec.org/h/pal/pmschp/978-1-137-44710-4_7.html
   My bibliography  Save this book chapter

Bad Regulation: Basel 2.5 and Basel 3

In: Good Regulation, Bad Regulation

Author

Listed:
  • Imad A. Moosa

    (Royal Melbourne Institute of Technology (RMIT))

Abstract

On 1 January 2012, a “milestone” of international financial regulation was passed when a precursor to Basel 3, Basel 2.5, presumably came into force. While the development of Basel 2.5 (and Basel 3) is the product of the realisation that Basel 2 could not have dealt adequately with the global financial crisis, nothing much has changed in the sense that most of the criticism of Basel 2 can be directed at Basel 2.5. It is a complex and tedious set of capital-based regulations that overlook critical issues such as leverage, liquidity, the separation of investment and commercial banking, and the problem of TBTF. The treatment of leverage and liquidity was left for Basel 3, which is scheduled to be implemented in 2019, as if these were trivial matters that can wait. Worst of all is that Basel 2.5 maintains the procedure whereby regulatory capital is calculated on the basis of risk-weighted assets, where weights are determined primarily by the credit rating agencies.

Suggested Citation

  • Imad A. Moosa, 2015. "Bad Regulation: Basel 2.5 and Basel 3," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Good Regulation, Bad Regulation, chapter 7, pages 121-140, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-1-137-44710-4_7
    DOI: 10.1057/9781137447104_7
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:pmschp:978-1-137-44710-4_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.