Leverage Ratio Eye-openers, updated

I updated this post, as discussion on the leverage ratio still suffer from poor understanding of this solvency measure.

Capital Issues

I updated this post, as discussions on the leverage ratio still suffer from a poor understanding of this solvency measure. See my post on this odd proposal by three Dutch professors, who basically want to turn back time to the Basel II (not III) era, and allow banks to borrow money to increase their capital ratios.

This post presents some eye-openers on the leverage ratio and Basel III solvency ratios. Discussions on the leverage ratio have gained momentum. However, the discussions on this measure of solvency sometimes lack rigour, which leads to poor inferences.

Small changes in the amount of capital held by a bank can have significant effects on a bank’s business. Therefore it is important to use consistent definitions and measure data correctly. I will focus on Basel III, as this standard is being implemented, and, apparently not always well understood.

So, time to open your eyes on…

View original post 1,055 more words

Advertisements

One thought on “Leverage Ratio Eye-openers, updated

  1. Pingback: BOE’s Announces its Position on Capital under CRR IV | Capital Issues

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s