the impact of new regulation on four european banking systems. a basel iii approach

Abstract

One of the solutions designed to rebuild the banking system is the reconfiguration of the regulatory framework. Still active, the episodes of liquidity shortage and bank failure ask for solid measures in order to increase the solidity of individual institutions, to protect the financial stability of the banking systems and to maintain confidence on the markets. The aim of this paper is to analyze the situation of four European banking systems (Czech Republic, Poland, Romania and Croatia) in terms of Basel III standards. Structured on three parts, the study points out the real concerns regarding Basel III effectiveness; analyzes the evolutions of capital, leverage and liquidity indicators and highlights the future possible scenarios/actions for aligning to the new regulation. To conclude, we determine the white and the black spots of the selected banking systems related to Basel III implementation. The results show good levels of capital in Poland, Czech Republic, Croatia and Romania, and some liquidity issues in Poland. The Czech and the Croatian banking systems are the best prepared for shocks.