Viktor Koziuk, Dr, Professor, member of the Council of National Bank of Ukraine, Academician of the Academy of Economic Sciences of Ukraine, Head of the Department of Economic Theory of Ternopil National Economic University, Ukraine
It is shown that reforms of banks regulatory requirements in Ukraine take place in global context of changes in banking regulation under Basel III implementation. It is proved that Basel III implementation helps not only to enhance financial stability but also solve plenty of problems related to institutional weakness. The fact of fundamental undercapitalization of Ukrainian banking system is shown as well as inability of such system to be resistant against NPL hikes even in time of formal suitability to formal regulatory norms. This confirms fact that previous banking regulation model was “blind” and unable to react adequately to institutional distortions. It’s shown that Basel III implementation in Ukraine all together with risk-oriented bank supervision first of all are addressed to institutional challenges that make procyclicality and risk concentration problems more radical.
Keywords: Basel III, bank regulation, bank capital, bank assets, oligarchical banking, institutional weakness.
JEL Classification: G21.
Cite as: Koziuk V. (2017). Transformation of Bank Capital Regulation in Ukraine: the Role of Institutional Distortions. Financial Markets, Institutions and Risks, 1(4), 16-23. DOI: 10.21272/fmir.1(4).16-23.2017
- BIS (2010). Basel III: A Global Regulatory Framework for More Resilient Banks and Banking System. Basel. BIS. June.
- BIS (2013). Global Systemically Important Banks: Updated Assessment Methodology and the Higher Loss Absorbency Requirements. Basel. BIS. July.
- Baker M., Wurgler J. (2013). Do Strict Capital Requirements Raise the Cost of Capital? Bank Regulation and the Low Risk Anomaly. NYU Working Paper. FIN-13-003.
- Kashyap A., Rajan R., Stein J. (2008). Rethinking Capital Regulation. In Proceedings-Economic Policy Symposium Jackson Hole. Federal Reserve Bank of Kansas City.
- Santos J. (2000). Bank Capital Regulation in Contemporary Banking Theory: A Review of the Literature. BIS Working Paper. 90, 1-40.
- Dagher J., Dell’Ariccia G., Laeven L., Ratnovski L., Tong H. (2016). Benefits and Costs of Bank Capital. IMF Staff Discussion Note. SDN/16/04, 1-38.
- Dimand D., Rajan R. (2000). A Theory of Bank Capital. NBER Working Paper, 7431, 1-58.
- BIS (2010). An Assessment of the Long-term Economic Impact of Stronger Capital and Liquidity Requirements. Basel. August.
- Gambacorta L., Song Shin H. (2016). Why Bank Capital Matter for Monetary Policy. BIS Working Paper. 558, 1-34.
- Gambacorta L., Karmakar S. (2016). Leverage and Risk Weighted Capital Requirements, BIS Working Paper.586, 1-38.
- Tirole J. (2006). The Theory of Corporate Finance. Princeton: Princeton University Press.
- La Porta R., Lopez-de-Silanes F., Zamarripa G. (2003). Related Lending. Quarterly Journal of Economics. 118(1), 231-267.
- Rajan R. (1992). Insiders and Outsiders: The Choice Between Informed and Arms-Length Debt. Journal of Finance, 7, 1367-1400.
- La Porta R., Lopez-de-Silanes F., Shleifer A., Vishny R. (1997). Legal Determinants of External Finance. Journal of Finance, 52(3), 1131-1150.
- Cull R., Haber S., Imai M. (2006). All Bad, All of the Times? Related Lending and Financial Development. Stanford Center for International Development, 1-56.
- Laeven L., Valencia F. (2012). Systemic Banking Crises Database: An Update. IMF Working Paper. WP/12/163, 1-32.