Global Bank Regulation: Principles and Policies covers the global regulation of financial institutions. It integrates theories, history, and policy debates, thereby providing a strategic approach to understanding global policy principles and banking. The book features definitions of the policy principles of capital regularization, the main justifications for prudent regulation of banks, the characteristics of tools used regulate firms that operate across all time zones, and a discussion regarding the 2007-2009 financial crises and the generation of international standards of financial institution regulation. The first four chapters of the book offer justification for the strict regulation of banks and discuss the importance of financial safety. The next chapters describe in greater detail the main policy networks and standard setting bodies responsible for policy development. They also provide information about bank licensing requirements, leading jurisdictions, and bank ownership and affiliations. The last three chapters of the book present a thorough examination of bank capital regulation, which is one of the most important areas in international banking. The text aims to provide information to all economics students, as well as non-experts and experts interested in the history, policy development, and theory of international banking regulation. Defines the over-arching policy principles of capital regulation Explores main justifications for the prudent regulation of banks Discusses the 2007-2009 financial crisis and the next generation of international standards of financial institution regulation Examines tools for ensuring the adequate supervision of a firm that operates across all time zones
Introduction: The Global Financial System and the Problems of Regulation 1. The Changing Nature of Banks Definitions Money, Credit Creation, and Fractional Reserve Banking Financial Innovation and the Changing Nature of Banks Three Distinctive Features of Modern Banking References Further Reading 2. Panics, Bank Runs, and Coordination Problems The Structure of Banks' Balance Sheets Coordination Problems and Bank Runs Panic and Contagion in Modern Financial Systems Free Riders and Regulation References Further Reading 3. Collapsing Dominos and Asset Price Spirals Collapsing Dominos Asset Price Spirals The Global Financial Crisis of 2007-2009 References Further Reading 4. The Financial Safety Net and Moral Hazard The Financial Safety Net Moral Hazard Is There an Alternative? References Further Reading 5. Sources of Financial Regulation National Laws International Law References Further Reading 6. Bank Licensing and Corporate Governance The Purpose of Bank Licensing The Fundamentals of Bank Licensing Fitness and Propriety of Bank Management Significant Changes in Ownership Choice of Bank Charter Cross-Border Issues Principles of Sound Corporate Governance Sarbanes-Oxley Act of 2002 References Further Reading 7. Bank in Corporate Groups: Ownership and Affiliation Bank-Commerce Linkages The Separation of Banking and Finance Changes to Structural Regulation of the Combination of Banking and Other Financial Services References Further Reading 8. The Rationale for Bank Capital Regulation Why Regulate Bank Capital? Leverage Ratios Risk-Weighted Capital Criticisms of the Basel Capital Accord References 9. The New Capital Adequacy Framework: Basel II and Credit Risk The Standardized Approach The Internal Ratings-Based (IRB) Approaches Dealing with Financial Innovation References Further Reading 10. The New Capital Adequacy Framework: Basel II and Other Risks Market Risk Operational Risks Pillar 2 Risks References Further Reading 11. Direct Limits on Banks' Risk Taking Credit Concentration Risk Liquidity Risk References 12. Consolidated Supervision and Financial Conglomerates What Is Consolidated Supervision? The Need for Consolidated Supervision Consolidated Supervision of Cross-Border Banks Financial Conglomerates References 13. Anti-Money Laundering What Is Money Laundering? The Impact on Banks International Response Banco Delta Asia Case Study References Further Reading 14. Bank Insolvency The Goals and Types of Bank Insolvency Regimes Legal Framework for Bank Insolvency Determination of Insolvency Administration Orders and Conservatorships Receivership References Further Reading 15. Institutional Structures of Regulation Institutional and Functional Regulation Rise of the Integrated Regulator Twin Peaks (Objectives) Approach Role of the Central Bank in Bank Supervision Evaluation of Structural Reforms References Further Reading 16. Regulation After the Global Financial Crisis The Causes of the Crisis Rethinking the Assumptions of Regulation New Directions in Capital Adequacy More Radical Options The International Dimension References Appendix: Introduction to Regulation and Market Failure Index
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