Procyclicality Effects on Bank Lending Decisions. A Case Study of the British Banking Sector
Journal Title: International Journal of Academic Research in Accounting, Finance and Management Sciences - Year 2015, Vol 5, Issue 2
Abstract
We perform detail analysis and review of capital regulation under Basel II including standardised and internal rating based approaches. We consider the parameters required for both approaches. Linkages between Basel II capital regulation and Procyclicality is established and we established the fact that even though procyclicality is inherent in banking sector, Basel II capital regulation has succeeded in exacerbating it particularly during the recent financial and economic crisis. We review the effects of procyclicality on the United Kingdom Bank lending decisions particularly during the economic crisis. This is compared with bank lending decisions pre crisis and post crisis period with a view to having holistic view of the effects. Our review covers main lending classifications in the UK. These include lending to businesses, secured lending to individuals and consumer lending. We conclude that Basel II capital regulation is not the genesis of procyclicality but one of the exacerbating factors. We assent to the fact that procyclicality genesis could be traced to failure of banks to efficiently allocate resources within the economy. Relevance of Basel II in improving risk management within banking sector is also emphasised.
Authors and Affiliations
Kazeem O. Sallam
Keywords
Related Articles
- EP ID EP116999
- DOI 10.6007/IJARAFMS/v5-i2/1694
- Views 85
- Downloads 0
Impact of HRM Practices on Employee’s Performance
This study was conducted to determine the impact of HRM practices on employee’s performance in the Textile industry of Pakistan. Random sampling technique was used to collect data for this research study. A questionnaire...
Analyze of IASB Futures Priorities Based on Responses at 2011 Agenda Consultation and IASB Actions
This paper analyzes the International Accounting Standards Board (IASB) Agenda for the period 2012-2015 from two points of views. The first one includes a detailed quantitative and qualitative analyze of the respondents...
Extent of Compliance with Code of Ethics and its Impact on Internal Audit Effectiveness
The study aimed to identify the internal auditors’ compliance with code of ethics issued by the Institute of Internal Auditors, it includes (Integrity, Objectivity, Confidentiality, and Competency) and its impact on the...
The Determinants of Relationship Between Budgetary Participation and Budgetary Slack
The objective of this study is to test the influence of budgetary participation on budgetary slack, as well as to test whether or not information asymmetry, job relevant information, goal orientation, organizational comm...
Youths’ Unemployment, Migration and NEETs in the Post-Crisis Period