A note on: Capital adequacy and the information content of term loans and lines of credit

Article Abstract:

The effect of the 1988-capital adequacy requirements on banks was examined. Banks reduced their level of commitment at the issuance of lines of credit. Firm size and concentration of borrowing also affected the market reaction at disclosure of credit agreements.

Canada, Statistical Data Included, Bank loans

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Financial contagion and the role of the central bank

Article Abstract:

The extent to which the reserve requirements imposed by a central bank on the banking industry can prevent a financial crises among banks is analyzed.

Legal issues & crime, Government regulation (cont), Netherlands, Government regulation, Management dynamics, Legal/Government Regulation, Economic aspects, Central banks, Powers and duties, Company business management, Financial crises

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Do capital adequacy requirements reduce risks in banking?

Article Abstract:

The rules on capital adequacy in banking raise the risks of a bank. The bank, however, would likely increase its equity in the future by raising its current risks considering the high cost of increase of equity. The establishment of regulations to reduce the insolvency risk of banks could lessen the profit margin of banks. The conclusion is based on the assumptions that increased risks elicit greater probability of default and higher conditional expected returns given no default risks.

Commercial banks, Bank management, Bank capital

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