The Ever-evolving Basel Accord

Damiano Guadalupi

Chapter 2 in Retail Credit Risk Management, 2013, pp 13-58 from Palgrave Macmillan

Abstract: Abstract Walter Bagehot in his Lombard Street, published in 1873, wrote, “A well-run bank needs no capital. No amount of capital will rescue a badly run bank”. Unfortunately, regulators cannot easily require banks to be “well-run” in Bagehot’s sense, so banks are required to hold capital as a backstop. Capital is not a bad substitute for perfect judgment, and at least it can be defined and measured (Davies, 2011). But how much capital is necessary to support the overall risk taken by a bank?

Keywords: Credit Risk; Capital Requirement; Asset Class; Capital Ratio; Basel Committee (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-1-137-00676-9_2

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DOI: 10.1057/9781137006769_2

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