DP9348 Capital, Trust and Competitiveness in the Banking Sector
Author(s): | Thomas Gehrig |
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.