Financial Market Regulation in Germany - Capital Requirements of Financial Institutions

Daniel Karl Dietzer ()
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Daniel Karl Dietzer: Berlin School of Economics and Law

PSL Quarterly Review, 2015, vol. 68, issue 272, 57-86

Abstract: This paper examines capital adequacy regulation in Germany. The first part reviews capital adequacy regulation from the 1930s up to the financial crisis and identifies two main trends: a gradual softening of the eligibility criteria for equity and increasing reliance on internal risk models. While the first trend has been reversed following the financial crisis, internal risk models still play a central role. Therefore, the second part discusses the problems with the use of internal risk models and discusses the potentials of Basel 2.5 and Basel III to alleviate the identified problems. It is concluded that the relevant problems are not resolved. Therefore, in the final part some suggestions of how the problems could be addressed properly are given.

Keywords: Banking Regulation; Capital Adequacy; Risk Models; Germany (search for similar items in EconPapers)
JEL-codes: G18 G28 N24 (search for similar items in EconPapers)
Date: 2015
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