DP9348 Capital, Trust and Competitiveness in the Banking Sector
|Publication Date:||February 2013|
|Keyword(s):||bank capital, Basel process of capital regulation, trust|
|JEL(s):||E58, G01, G21, H63|
|Programme Areas:||Public Economics, Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9348|
This note critically assesses the Basel reform process of capital regulation. It highlights the political nature of this process and argues that the absence of clearly spelled-out societal objectives has been detrimental in furthering stability and soundness of the banking systems in the run-up of the 2007/8 financial crisis. The positive externalities of bank capital have not hitherto been explicitly been taken into consideration.