Special Issue "Financial Stability and Regulation / Basel III"

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074).

Deadline for manuscript submissions: closed (30 June 2017)

Special Issue Editor

Guest Editor
Prof. Dr. Tai-Leung Terence Chong

Lau Chor Tak Institute of Global Economics and Finance, The Chinese University of Hong Kong, Cheng Yu Tung Building, Shatin, NT, Hong Kong, China and the Department of International Economics and Trade, School of Business, Nanjing University, Anzhong Building, Hankou Road #22, Gulou District, Nanjing, Jiangsu Province, China
Website | E-Mail
Phone: +852 2609 8193
Fax: +852 2603 5805
Interests: econometrics; econometric theory; banking and finance

Special Issue Information

Dear Colleagues,

The global financial crisis of 2007-2008 and the recent global volatility triggered by developments in emerging markets and China affected banking systems and macroeconomic conditions around the world. Improved corporate governance and risk management for banks and other financial institutions are important for the stability of the global financial system. To provide a timely and comprehensive overview of recent developments in financial regulation in relation to the recent development of global financial markets, the Journal of Risk and Financial Management invites papers from policymakers, scholars, and practitioners for our special issue on financial regulations and Basel III. The special issue welcomes latest theoretical, empirical and policy-oriented research on systemic risk, Basel III, financial stability, governance and regulation. We especially welcome papers that successfully bring academic rigor to practical questions faced by regulators. Researchers from supervisory authorities and central banks are also encouraged to submit their papers to this special issue. Original contributions are invited on any topic in financial regulation, including but not limited to:

  • Identifying and measuring systemic risk for financial institutions and markets
  • Liquidity risk, contagion, spill-over of financial shocks
  • Asset price cycles, financial stability and policy responses
  • Fair value accounting for banks and other financial institutions
  • Bank ratings and credit rating agencies
  • Supervision and coordination of cross border banking activities
  • Practical and policy issues in stress testing financial institutions
  • The evolution of the OTC derivative markets
  • Capital requirements, shadow banking and systemic institutions
  • The implementation of the Dodd-Frank Act, the JOBS Act
  • Basel III framework and risk weighting issues
  • Historical analysis of bank capital and financial crisis
  • Executive compensation and remuneration systems in financial institutions

Prof. Terence Tai Leung CHONG
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All papers will be peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access quarterly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 350 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • systemic risk
  • Basel III
  • financial stability
  • financial governance
  • financial regulation

Published Papers (4 papers)

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Research

Open AccessArticle Trade Openness and Bank Risk-Taking Behavior: Evidence from Emerging Economies
J. Risk Financial Manag. 2017, 10(3), 15; https://doi.org/10.3390/jrfm10030015
Received: 22 June 2017 / Revised: 21 July 2017 / Accepted: 25 July 2017 / Published: 29 July 2017
Cited by 1 | PDF Full-text (304 KB) | HTML Full-text | XML Full-text
Abstract
In this paper, we examine the impact of trade openness on bank risk-taking behavior. Using a panel dataset of 291 banks from 37 emerging countries over the period from 1998 to 2012, we find that higher trade openness decreases bank risk-taking. The results
[...] Read more.
In this paper, we examine the impact of trade openness on bank risk-taking behavior. Using a panel dataset of 291 banks from 37 emerging countries over the period from 1998 to 2012, we find that higher trade openness decreases bank risk-taking. The results are robust when we use alternative bank risk-taking proxies and alternative estimation methods. We argue that trade openness provides diversification opportunities to banks in lending activities, which decrease overall bank risk. Further to this end, we observe that higher trade openness helps domestic banks to smooth out income volatility and decreases the impact of a financial crisis on banks. Full article
(This article belongs to the Special Issue Financial Stability and Regulation / Basel III)
Open AccessArticle Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh
J. Risk Financial Manag. 2017, 10(2), 9; https://doi.org/10.3390/jrfm10020009
Received: 31 December 2016 / Revised: 10 April 2017 / Accepted: 12 April 2017 / Published: 17 April 2017
Cited by 3 | PDF Full-text (654 KB) | HTML Full-text | XML Full-text
Abstract
In response to the recent global financial crisis, the regulatory authorities in many countries have imposed stringent capital requirements in the form of the BASEL III Accord to ensure financial stability. On the other hand, bankers have criticized new regulation on the ground
[...] Read more.
In response to the recent global financial crisis, the regulatory authorities in many countries have imposed stringent capital requirements in the form of the BASEL III Accord to ensure financial stability. On the other hand, bankers have criticized new regulation on the ground that it would enhance the cost of funds for bank borrowers and deteriorate the bank profitability. In this study, we examine the impact of capital requirements on the cost of financial intermediation and bank profitability using a panel dataset of 32 Bangladeshi banks over the period from 2000 to 2015. By employing a dynamic panel generalized method of moments (GMM) estimator, we find robust evidence that higher bank regulatory capital ratios reduce the cost of financial intermediation and increase bank profitability. The results hold when we use equity to total assets ratio as an alternative measure of bank capital. We also observe that switching from BASEL I to BASEL II has no measurable impact on the cost of financial intermediation and bank profitability in Bangladesh. In the empirical analysis, we further observe that higher bank management and cost efficiencies are associated with the lower cost of financial intermediation and higher bank profitability. These results have important implications for bank regulators, academicians, and bankers. Full article
(This article belongs to the Special Issue Financial Stability and Regulation / Basel III)
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Open AccessArticle An Empirical Study on the Impact of Basel III Standards on Banks’ Default Risk: The Case of Luxembourg
J. Risk Financial Manag. 2017, 10(2), 8; https://doi.org/10.3390/jrfm10020008
Received: 10 February 2017 / Revised: 31 March 2017 / Accepted: 1 April 2017 / Published: 12 April 2017
PDF Full-text (671 KB) | HTML Full-text | XML Full-text
Abstract
We study how the Basel III regulations, namely the Capital-to-Assets Ratio (CAR), the Net Stable Funding Ratio (NSFR) and the Liquidity Coverage Ratio (LCR), are likely to impact banks’ profitability (i.e., ROA), capital levels and default. We estimate historical series of the new
[...] Read more.
We study how the Basel III regulations, namely the Capital-to-Assets Ratio (CAR), the Net Stable Funding Ratio (NSFR) and the Liquidity Coverage Ratio (LCR), are likely to impact banks’ profitability (i.e., ROA), capital levels and default. We estimate historical series of the new Basel III regulations for a panel of Luxembourgish banks for a period covering 2003q2–2011q3. We econometrically investigate whether historical LCR and NSFR components, as well as CAR positions are able to explain the variation in a measure of a bank’s default risk (approximated by Z-score) and how these effects make their way through banks’ ROA and CAR.We find that the liquidity regulations induce a decrease in average probabilities of default. We find that the liquidity regulation focusing on maturity mismatches (i.e., NSFR) induces a decrease in average probabilities of default. Conversely, the impact on banks’ profitability is less clear-cut; what seems to matter is banks’ funding structure rather than the characteristics of the portfolio of assets. Additionally, we use a model of bank behavior to simulate the banks’ optimal adjustments of their balance sheets as if they had to adhere to the regulations starting in 2003q2. Then, we predict, using our preferred econometric model and based on the simulated data, the banks’ Z-score and ROA. The simulation exercise suggests that basically all banks would have seen a decrease in their default risk during a crisis episode if they had previously adhered to Basel III. Full article
(This article belongs to the Special Issue Financial Stability and Regulation / Basel III)
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Open AccessArticle The Nexus between Social Capital and Bank Risk Taking
J. Risk Financial Manag. 2016, 9(3), 9; https://doi.org/10.3390/jrfm9030009
Received: 10 May 2016 / Revised: 4 July 2016 / Accepted: 14 July 2016 / Published: 29 July 2016
PDF Full-text (819 KB) | HTML Full-text | XML Full-text
Abstract
This study explores social capital and its relevance to bank risk taking across countries. Our empirical results show that the levels of bank risk taking are lower in countries with higher levels of social capital, and that the impact of social capital is
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This study explores social capital and its relevance to bank risk taking across countries. Our empirical results show that the levels of bank risk taking are lower in countries with higher levels of social capital, and that the impact of social capital is mainly reflected by the reduced value of the standard deviation of return on assets. Moreover, the impact of social capital is found to be weaker when the legal system lacks strength. Furthermore, the study considers the impacts of social capital of the banks’ largest shareholders in these countries and finds that high levels of social capital present in these countries exert a negative effect on bank risk taking, but the effect is not strongly significant. Full article
(This article belongs to the Special Issue Financial Stability and Regulation / Basel III)
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