Got a tricky question? Receive an answer from students like you! Try us!

banking - Essay Example

Only on StudentShare
Author : roslyn71


The rules of Basel I for calculating risk weighted assets are said not to reflect the true economic risk of a transaction in its entirety, but only to a limited extent. Under the Basel 1, a corporate exposure with a high rating and low risk attracts the same credit risk weighting as a corporate exposure with a low rating and a high risk1.

Extract of sample

Not only the internal rating, but also the governance and the quality of risk management will be a major factor in being able to use internal ratings as a basis for calculating regulatory capital requirements.
National supervisors will authorise firms to use one of the internal-ratings based approaches on a case by case basis. Basel II also introduces capital requirements for operational risk, a risk category that was not explicitly addressed under the Basel I rules.
To a large extent, the proposed Basel II was in response to widespread criticism of Basel I. But it also reflected additional thought and analysis of the role of bank capital regulation. In particular, Basel II added two new "pillars" - supervisory review (pillar 2) and market discipline (pillar 3) - to the single pillar of minimum capital requirement of Basel I. In response to public comments, the Committee revised its proposal twice and issued a third consultative paper (CP3) in early 2003. If approved, the proposed standards are scheduled for implementation in most countries at the beginning of 2007. In preparation, in August 2003, U.S. ...
Download paper

Related Essays

Nigerian Banking
(Caprio, and Klingebiel, 1996). Nigeria is a country blessed with abundant reserves of natural resources that could support the long-term growth plans of the country. Thus the banking sector holds a considerable promise in the development plans of the Nigeria into the future. This aspect was hardly been through to the focus due to various factors like unstable governance systems, soaring debts during the 1990 period. In an effort to transform the Nigerian banking sector several creative efforts and effective interventions were made in the past. The present efforts are part of the fourth phase…
8 pages (2008 words)
Investment banking & private banking
This development must bring about sustainable increase in living standards which implies that per capita income of the citizens will improve improved education and health as well as an environment that is friendly to human life. It's a concerted effort on the government to steer the direction of private sector of the country or in a city towards creating opportunities that lead to sustainable economic growth that can provide enough incomes to the labor force, enable employers to gainfully engage in business opportunities that eventually can provide enough tax revenue to maintain the country's…
15 pages (3765 words)
Internet Banking
The dissertation undertakes a comprehensive literature survey on use of internet banking.Utilising the case study approach and administering a questionnaire amongst university students this research concludes that awareness of students to concept of internet banking is substantial; however it is conceptual and strong only in case of students with finance/commerce/banking/management backgrounds. Similarly usage is more well defined for those that are aware of the concept, in particular those that are fairly aware of the concept. Usage is need based and utilitarian. Those using internet banking…
56 pages (14056 words)
ing overtaken by Dutch giant ING for a measly sum of £1, and exposing the risky environment in which equity corporations scale catastrophic limits in order to make a quick profit.…
10 pages (2510 words)
Relationship banking
Sale of banking products has become extremely competitive. This paper will discuss how relationship marketing has penetrated the banking sector and what are its pitfalls or benefits. It will also discuss the type of relationship that banks have with customers and what marketing activities it performs to establish and maintain such relationships.…
6 pages (1506 words)
Banking finance
10 pages (2510 words)
islamic banking
The laws governing Islamic banking aim at protecting the interests of the public (El, Tiby 3). This paper will discuss why Islamic banks are becoming popular to the extent that they can extend their services to most parts of the world. The paper will also discuss how Islamic banking can be the solution to the economic problems that emanate from the financial crisis.…
3 pages (753 words)