Liquidity describes a bank’s ability to fund asset increases and meet financial obligations, without incurring damaging losses. The 2007 to 2009 financial crisis had a negative impact on liquidity in the global banking system. The causes of the crises include excess liquidity risk, which resulted in an upsurge in credit with weak quality, excess leverage, and too little capital of insufficient quality. In response to this, new Basel III liquidity regulation was introduced. In this book, we apply such regulation on a broad cross section of countries in order to develop and demonstrate methodologies related to Basel III.
In Chapter 2, we provide an overview of the Basel I, II, and III Capital Accords as well as the role of the Basel Committee ...
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