The Leverage Ratio as a Bank Discipline Device

Clovis Rugemintwari

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Abstract: This paper investigates bank portfolio composition under Basel II where the amount of required capital is determined by bank's own risk assessment. We particularly show that in presence of asymmetric information between the bank and the supervisor, it has incentives to understate its risk taking which could be curbed by the addition of the simple leverage ratio as suggested in Basel III.

Keywords: bank capital buffer; prudential regulation; Basel accords (search for similar items in EconPapers)
Date: 2011
Note: View the original document on HAL open archive server: https://unilim.hal.science/hal-00785487v1
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Citations: View citations in EconPapers (5)

Published in Revue Economique, 2011, 62 (3), pp.479-490. ⟨10.3917/reco.623.0479⟩

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Journal Article: The Leverage Ratio as a Bank Discipline Device (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00785487

DOI: 10.3917/reco.623.0479

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