We analyze the effects on financial institutions` capital adequacy ratios under the Basel III framework. Since the Basel III requires the improvement of the capital quality and the increase of the capital ratio, We predict the behavior of financial in...
We analyze the effects on financial institutions` capital adequacy ratios under the Basel III framework. Since the Basel III requires the improvement of the capital quality and the increase of the capital ratio, We predict the behavior of financial institutions under the Basel III. Also, we discuss the role of the so called leverage ratio, which is newly introduced under the Basel III, and investigate the circumstances which may be caused by the introduction of the leverage ratio. Finally, we consider the effect of the countercyclical buffer, which is expected to ease the procyclicality of the capital. Base on the above analysis, we then suggest the policies to solve the problems that might be occurred by the introduction of the Basel III.