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Supervision of financial institutions: The transition from Basel I to Basel III. A critical appraisal of the newly established regulatory framework

Georgios L Vousinas (Industrial Management and Operational Research, National Technical University of Athens, Athens, Greece)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Article publication date: 9 November 2015

2654

Abstract

Purpose

This paper aims to highlight the new regulatory framework established by Basel III.

Design/methodology/approach

This paper provides a critical review of the existing literature concerning bank supervision while providing an overview of the transition from Basel I to Basel III rules and critical appraisal of the current regulatory framework. Review of the existing literature.

Findings

Basel III introduces new measures in favor of bank stability and in order to mitigate the propagation of financial shocks. But on the other hand the new regulatory framework adds an extra burden to banks’ business plans affecting credit policies and thus the real economy. Another issue that is not properly addressed is the rising of financial innovations that are able to pass by the new regulations. Overall Basel III rules are moving to the right direction but need to stay always up-to-date in order to catch up with the modern ever-evolving financial system. Pros and cons. Need for improvement.

Originality/value

The paper presents an up-to-date review of Basel rules with future prospects.

Keywords

Citation

Vousinas, G.L. (2015), "Supervision of financial institutions: The transition from Basel I to Basel III. A critical appraisal of the newly established regulatory framework", Journal of Financial Regulation and Compliance, Vol. 23 No. 4, pp. 383-402. https://doi.org/10.1108/JFRC-02-2015-0011

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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