Open Access. Powered by Scholars. Published by Universities.®

Business Law, Public Responsibility, and Ethics Commons

Open Access. Powered by Scholars. Published by Universities.®

2005

Bank regulation

Articles 1 - 1 of 1

Full-Text Articles in Business Law, Public Responsibility, and Ethics

Basel Ii And The Need For Bank Distress Resolution Procedures, Clas Wihlborg Jan 2005

Basel Ii And The Need For Bank Distress Resolution Procedures, Clas Wihlborg

Business Faculty Articles and Research

It is argued that without increased market discipline Basel II is not likely to resolve the regulatory problem caused by explicit and implicit guarantees of depositors and other creditors of banks. One way to enhance market discipline is to implement proposals for mandatory subordinated debt. For these proposals to achieve their objective, the non-insurance of holders of subordinated debt must be credible. Increased credibility of non-insurance of one or several groups of creditors could be enhanced if distress resolution procedures for banks were pre-specified, and if they made possible bank failures without serious disruption of the financial system. The existence ...