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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
The New Approach for Risk Regulation in Banks
Author(s)
Daniela Feschiyan, Radka Andasarova
Full-Text PDF XML 443 Views
DOI:10.17265/1537-1506/2019.01.003
Affiliation(s)
University of National and World Economy, Sofia, Bulgaria
ABSTRACT
The purpose of this report is
to present the necessity of proceeding to new reforms in bank regulation and to
increase the stability and risk sensitivity of the capital base under applying the
Standardised Credit Risk Assessment Approach (SCRA) in banks. The dynamics in the
bank regulation and supervision of credit risk assessment approaches are explored.
In the paper, a thorough theoretical-methodological and historical-logical analysis
was made of the evolution of the development and chronology of the global regulatory
frameworks for banks—Basel 1, Basel 2, and Basel 3. The contemporary projections
and challenges for the banks’ management under the new regulatory and institutional
changes are presented. The SCRA is a positive asset in bank capital regulation in
contemporary banking. The revisions to the regulatory framework by Basel
3 are a long continuous process influenced by numerous economic, social,
and political factors. The preparation of the Bulgarian banking system for a new
reform of financial regulation is analyzed. The need for adoption of a new risk-based
approach for capital assessment and the importance of transparency in bank financial
reporting is proved.
KEYWORDS
Basel Committee on Banking Supervision (BCBS), standardised approach (SA), credit risk, bank exposures, risk-weighted assets (RWA)
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