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This paper provides a comprehensive overview of the gradual evolution of the supervisory policy adopted by the Basel Committee for the regulatory treatment of asset securitisation. The pathology of the new “securitisation framework” is carefully highlighted to facilitate a general understanding of what constitutes the current state of computing adequate capital requirements for securitised credit exposures. Although a simplified sensitivity analysis of the varying levels of capital charges depending on the security design of asset securitisation transactions is incorporated, the author does not engage in a profound analysis of the benefits and drawbacks implicated in the new securitisation framework.

The 1988 Basel Accord and the proposed revisions to the Accord represent some of the most significant international regulations impacting the financial decisions of firms, in this case, financial services firms, in recent years. The revisions to the Accord incorporate operational risk into the capital, supervisory and market requirements. In our review of the issues in this area, we provide insight into the workings of an important international regulation. We also present suggestions for further research in this area that will become feasible when data on the impact of the new regulations become available after the proposed implementation in 2006.

The need for international regulation of financial markets became apparent in the mid‐1970s in response to the post‐Bretton Woods liberalisation of financial markets. The elimination of the fixed exchange rate parity with gold resulted in the privatisation of financial risk, which created pressure to eliminate controls on cross‐border capital movements and the further deregulation of financial markets. It became necessary for national regulatory authorities to promote safe and sound banking systems through the effective management of systemic risk in national markets. Similarly, the need for international standards of prudential supervision was also recognised, to prevent solvent banking institutions in one jurisdiction from losing business to less respectable institutions operating in other jurisdictions whose laws permitted cut‐rate financial services and other risky financial practices. The privatisation of financial risk also created the need for financial institutions to spread their risks over many assets and activities, which led, in turn, to a significant increase in short‐term cross‐border portfolio investment that has, in many instances, exposed capital‐importing countries to increased systemic risk due to the volatility of such investments.

This study investigates Asia Pacific banks' annual report disclosures on derivatives using the Basel Committee and IOSCO joint recommendations as the derivative and risk management disclosure benchmark. Based on our constructed disclosure index, the mean score is 35%, suggesting that many of the disclosure recommendations are not being adopted by the banks in our sample. Cross‐country and regional variation exists in the disclosure practices, with the variation associated with the extent to which accounting regulations for derivative instruments are operational. Hong Kong banks have the highest mean disclosure scores while the Philippines banks have the lowest mean disclosure scores. Australasian banks generally provide more disclosures than East Asian and South East Asian banks, and banks in developed countries generally have a higher level of disclosure relative to developing countries. The transparency of derivative activities by the banks is expected to improve as Asia Pacific countries promulgate accounting regulations congruent with international accounting standards.

Amid increased size and complexity of the banking industry, operational risk has a greater potential to occur in more harmful ways than many other sources of risk. This paper seeks to provide a succinct overview of the current regulatory framework of operational risk under the New Basel Accord with a view to inform a critical debate about the influence of data collection, loss reporting, and model specification on the consistency of risk‐sensitive capital rules.

The paper's approach is to investigate the regulatory implications of varying characteristics of operational risk and different methods to identify operational risk exposure.

The findings reveal that effective operational risk measurement hinges on how the reporting of operational risk losses and the model sensitivity of quantitative methods affect the generation of consistent risk estimates.

The presented findings offer tractable recommendations for a more coherent and consistent regulation of operational risk.

This paper aims to highlight the new regulatory framework established by Basel III.

This paper provides a critical review of the existing literature concerning bank supervision while providing an overview of the transition from Basel I to Basel III rules and critical appraisal of the current regulatory framework. Review of the existing literature.

Basel III introduces new measures in favor of bank stability and in order to mitigate the propagation of financial shocks. But on the other hand the new regulatory framework adds an extra burden to banks’ business plans affecting credit policies and thus the real economy. Another issue that is not properly addressed is the rising of financial innovations that are able to pass by the new regulations. Overall Basel III rules are moving to the right direction but need to stay always up-to-date in order to catch up with the modern ever-evolving financial system. Pros and cons. Need for improvement.

The paper presents an up-to-date review of Basel rules with future prospects.

The banking industry has adopted an approach to managing financial risk based on economic capital, the amount of capital necessary to achieve a specified level of protection against financial ruin. In the New Basel Capital Accord, regulators have recently proposed capital regulation to reduce operational risk. In this article, the author challenges the rationale for employing a capital charge to mitigate operational risk.

This paper aims to propose the directions for potential reforms for the capital regulation. The focus is on the simplicity and comparability of the regulation, in addition to its risk sensitivity.

The author reviews the development of the Basel standards and identify the existing issues. On this basis, the recommendations are suggested.

The paper found that the capital regulation has become so complexed that it undermines its own efficiency in promoting the safety and soundness of the banking system. In addition, the current framework prevents a comparison of capital ratios across countries and over time. This discourages the market participants to supervise the bank’s operations. Therefore, there are still a need for the capital regulation reform.

By making the regulation simpler while ensuring the credit sensitivity, the market participants can play the most of their role and support the regulators in supervising banks.

The directions for the revised framework would be useful for the Basel Committee and central bank governors in designing an effective mechanism to supervise and discipline banks.

This study aims at exploring the UAE banks' Basel II preparations. It is essential for the UAE banks to make adequate preparations to ensure their compliance with international standards and practices in the field of banking.

The author developed a modified version of the Ernst & Young questionnaire to examine the UAE banks' Basel II preparations. Five hypotheses have been formulated and tested.

Based on the results of the analysis in this study, it is concluded that the UAE banks are ready for the implementation of Basel II. This conclusion is supported by the fact that the UAE banks have sufficient resources for the implementation of Basel II, which represents a prerequisite for the implementation. The readiness of the UAE banks for implementing Basel II is also supported by the common understanding of Basel II by the employees of the UAE banks and the satisfactory level of education on Basel II. The results also indicate that there is no difference between UAE national and foreign banks in their readiness for the implementation of Basel II, which gives a positive impression about the competitive advantage of the national banks. Finally, the results support the importance of training and education on Basel II as one of the requirements of the implementation.

Improving the level of education on Basel II is still needed and this can be achieved because of the availability of the required resources and the awareness of the UAE banks of the benefits, the positive impact, and the challenges of the implementation of Basel II, as indicated by the results. The results also support the importance of training and education on Basel II as one of the requirements of the implementation.

The paper is important for the decision makers of the UAE banks and the regulators as the main objective of the study is to increase their awareness of the implementation of Basel II. The results would help the UAE banks to know the level of their Basel II preparations and what are the necessary steps that should be taken in this regard. The results would also help the regulators regarding the required steps that should be taken by the UAE Central Bank in order to motivate or encourage the UAE banks in implementing Basel II properly.

The purpose of this paper is to measure the cultural fit between supervisory authorities and banks, considering cultural gaps as possible stumbling blocks for effective supervision.

The paper uses a text‐analysis approach. The methodological assumption is that the analysis of culture is closely connected to the analysis of the type of language used by the members of an organization. To this aim, a cultural survey was developed in order to compare cultures of Bank of Italy, Italian banks, and Basel Committee during the years 1999 and 2004.

The results highlight several significant, but decreasing, cultural gaps relating to important issues for banks, such as risk, disclosure, change, and innovation.

The evidence and the measurement of cultural gaps are useful elements for the identification of change actions by supervisors and banks. In fact, identified gaps could be detrimental for an effective supervision and could be a source of regulatory risk for regulated banks.

This paper focuses on an evolutionary aspect of text analysis, concerning standardization in the treatment of data, combined with the use of standard vocabularies. This allows a greater comparability of the output of the various studies, enabling us to further refine the methodology. The analysis model includes the definition of several concepts – such as “risk” and “disclosure” – at the base of the development of banking culture and representing basic goals of prudential regulation.