CVA: the first sign of BCBS strategic change?

Mika Veli-Pekka Viljanen

Journal of Financial Regulation and Compliance, 2015, vol. 23, issue 3, 230-251

Abstract: Purpose - – The purpose of this paper is to aid understanding of the changes in Basel Committee on Banking Supervision (BCBS) regulatory strategies after the global financial crisis. Design/methodology/approach - – The author uses the credit valuation adjustment (CVA) charge reform as a test case for inquiring whether BCBS has departed from its pre-crisis facilitative regulatory strategy path. The regulatory strategy of the CVA charge is discussed. Findings - – The charge exhibits a new regulatory strategy that BCBS has adopted. It seeks to manipulate market structures by imposing risk-insensitive capital charge methodologies. Originality/value - – The paper offers a new heuristic to analyse regulatory initiatives and their significance. The CVA charge has not been subject to a regulatory theory-based analysis in prior literature.

Keywords: Banking; Strategy; Capital regulation; Credit valuation adjustment (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:v:23:y:2015:i:3:p:230-251

DOI: 10.1108/JFRC-05-2014-0021

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