Cetier posts a critical note on capital shortfall research.

My post “The Greatest Hoax on European Bank Capital Shortfalls ever?”, a pastiche on a similarly titled paper by researchers Viral Acharya and Sascha Steffen just appeared on Pieria. Capital shortfall papers, with such a wide range of results are a reason to worry about the correct definition of solvency, or the lack thereof.

Do Regulatory Bank Capital Adjustments actually work?

This recent social science research network paper (A primer on regulatory bank capital adjustments) examines regulatory adjustments. These are adjustments that banks apply to book equity to calculate Tier 1 regulatory capital. The paper, relying on U.S. data, documents a decreasing relation between regulatory adjustments and bank solvency. Specifically, low solvency banks benefit from regulatory… Read More Do Regulatory Bank Capital Adjustments actually work?

Jay! EBA publishes standards on NPL, Forbearance, and AQR

The European Banking Authority (EBA) released today its final technical standards on supervisory reporting on Non-Performing Exposures and Forbearance, which will provide consistent indicators of asset quality of banks across the European Union. The EBA also issued recommendations on asset quality reviews (AQRs) aimed at supporting existing and/or planned reviews across the EU. See link… Read More Jay! EBA publishes standards on NPL, Forbearance, and AQR