Publication: Bank Capital and Risk in Europe and Central Asia Ten Years After the Crisis
Date
2020-01
ISSN
Published
2020-01
Author(s)
Abstract
This paper examines changes in bank
capital and capital regulations since the global financial
crisis, in the Europe and Central Asia region. It shows that
banks in Europe and Central Asia are better capitalized, as
measured by regulatory capital ratios, than they were prior
to the crisis. However, the increase in simple equity ratios
for the same banks has been smaller over the past 10 years.
The increases in regulatory capital ratios have coincided
with a reduction in the stringency of the definition of Tier
1 capital and reduction in risk-weights. Further analyses
show that bank risk in Europe and Central Asia is more
sensitive to changes in simple leverage ratios than in
regulatory capital ratios, consistent with the notion that
equity ratios only include high-quality capital and do not
rely on internal risk models to compute risk-weights.
Although there has been some effort to increase capital and
liquidity requirements for institutions deemed systemically
important, the region has been lagging in addressing the
resolution of these institutions.
Citation
“Anginer, Deniz; Demirguc-Kunt, Asli; Mare, Davide S.. 2020. Bank Capital and Risk in Europe and Central Asia Ten Years After the Crisis. Policy Research Working Paper;No. 9138. © World Bank, Washington, DC. http://hdl.handle.net/10986/33294 License: CC BY 3.0 IGO.”
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