Solvency, Liquidity, Asset-Backed Paper, and the Carry Trade

Dimitris N. Chorafas
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Dimitris N. Chorafas: New York Academy of Sciences

Chapter 9 in Financial Boom and Gloom, 2009, pp 209-234 from Palgrave Macmillan

Abstract: Abstract Regulators, members of the board of directors, and the public must be confident that the capital requirements of a credit institution are determined in a way that enhances safety and soundness, not only of the company itself but of the banking system as a whole. While capital adequacy regulations should neither penalize banks nor artificially distort the competitive playing field, they should assure the bank’s survival in case of crisis — precisely when core capital is the most important. In terms of capital adequacy, banks suffer from two catastrophic risks: Insolvency, and Illiquidity.

Keywords: Central Bank; Credit Risk; Credit Rating; Hedge Fund; European Central Bank (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-23583-0_9

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DOI: 10.1057/9780230235830_9

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