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The purpose of this paper is to examine whether board characteristics moderate the relationship between capital adequacy regulation and bank risk-taking of universal banks in Sub-Saharan Africa (SSA).

The paper uses 700 bank-year observations of universal banks in SSA between 2009 and 2019. The paper further uses the two-step generalized method of moments as the baseline estimator.

The paper finds that capital adequacy regulation is positively related to overall bank and liquidity risks. Nonetheless, capital adequacy regulation increases credit risk in the sampled banks. The paper further reports that board characteristics individually and significantly moderate the relationship between capital adequacy regulation and risk-taking.

The findings have implications for regulators of universal banks that board characteristics matter for capital adequacy regulation to impact risk-taking behavior.

The paper extends the existing literature on the effect of board characteristics on the capital adequacy regulations and risk-taking behavior nexus of universal banks.

This paper aims to investigate the interaction between capital requirements and pricing constraints as measures for insurance regulation.

In a theoretical model framework, the author derives the insurer’s shareholder-value-maximizing response to capital regulation, price regulation and the unregulated strategy as a benchmark; all three strategies are presented in an analytical form.

The paper demonstrates that risk-based capital requirements exhibit an efficiency advantage over price regulation and allow for lower premiums. Moreover, the analysis identifies situations in which price floors make insurance more expensive, but have no positive impact on the safety level.

The comparison between capital regulation and price floors provides policymakers with a methodology to evaluate which regulatory tool is more appropriate. Also, the article discusses that maximum discount rates for European life insurers could be ineffective when the new regulatory framework Solvency II is in place.

In all, the article obtains analytical and informative results with relevant implications for insurance regulation.

The purpose of the paper is to explore the legal and institutional frameworks for optimal regulation of capital market beyond compliance-based regulation, to enable the market to deliver on its strategic role as the enabler of efficient allocation of resources and economic growth.

The paper relies on doctrinal approach to assess the existing regulatory approaches and prospects for the future.

The paper found that the regulatory authorities unduly concentrate on compliance-based and sanction-based regimes without sufficient emphasis on innovations and transformative solutions that foster diversification and efficiency in the market. The paper also found that the deployment of innovations and transformative solutions complemented with robust regulation is positively correlated with capital market growth.

The paper offers fresh insights on the optimal approaches to regulation of capital market that transcend compliance-based and sanction-based regimes to reliance on innovative tools that expand, diversify and effectuate the functionality and utility of capital market.

The purpose of this paper, therefore, is to amplify the imperativeness for a re-oriented regulatory approach that prioritizes constructive engagement with the regulated communities, harnessing the existing pool of savings and retention of market participation.

The paper adopts a doctrinal legal research design with data drawn from primary and secondary sources of law. The primary sources include case laws and statutes, and the secondary sources include book chapters, journal articles and other internet-sourced materials.

The paper finds that the status quo in Nigeria if left to continue would spell severe economic disaster for Nigeria’s securities administration, but a well-structured realignment of the regulations would boost the country’s securities market effectiveness.

The research’s conclusions and suggestions might only be applicable to Nigeria’s particular situation with regard to capital market development and securities regulation. Other nations or locations with distinct regulatory systems, market structures and economic situations may not be able to immediately adapt it. When extending the research results outside of the Nigerian environment, caution should be exercised. For regulatory agencies and policymakers, the research offers insightful suggestions. The analysis may pinpoint certain areas where policy changes are required to address reoccurring problems and improve the chances for a healthy capital market.

For Nigeria’s regulatory frameworks controlling securities to be strengthened, this paper would be crucial. To make sure they are in line with global best practices, this entails examining and revising current laws, rules and standards. A stronger regulatory environment may also result from the implementation of harsher enforcement procedures and consequences for noncompliance. It is also required for creating market infrastructure, fostering market integration and cooperation, facilitating access to capital, monitoring and evaluation. It would also benefit investor education and protection.

Addressing these persistent issues and potential remedies in Nigeria’s capital market development and securities regulation would have various advantageous social effects. These include improved market infrastructure, more financial inclusion, improved investment protection for investors and improved market openness and integrity. Such results will help Nigerian society as a whole by fostering economic expansion, job creation, wealth distribution and general social progress.

This paper is the original work of the authors and has not been published anywhere nor submitted to another journal for publication.

The FDIC Improvement Act of 1991 sets out five categories of capital and mandates corrective action for banks. Each bank based on its capital amount fall in the certain categories or states. The purpose of this paper is to consider the effect of banking regulations and supervisory practices on capital state transition.

First, the authors investigate how much the practices influence banks' capital adequacy using a dynamic panel data method, the generalized method of moments. Then, to scrutinize the results of the first phase, the authors estimate the effect of practices on some characteristics of capital state transition such as transition intensity, transition probability and state sojourn time using multi-state models for panel data in 107 developing countries over the period 2000 to 2012.

The dynamic regression results show that capital guidelines, supervisory power and supervisory structure can have significantly positive effects on the capital adequacy state. Moreover, the multi-state Markov panel data model estimation results show that the significantly positive-effect practices can change the capital state transition intensity considerably; for example, they can transmit the critical-under-capitalized (the lowest) capital state of banks directly to a well or the adequate-capitalized (the highest) capital state without passing through middle states (under-capitalized and significantly-undercapitalized). Moreover, the results present some new evidence on transition probability and state sojourn time.

The main contribution of this paper, unlike the existing literature, is to consider the power of banking regulations and supervisory practices to improve the capital state using a multi-state Markov panel data model.

The most significant recent reform in international bank regulation has been in the area of capital adequacy, first instigated by the BASLE Committee and formally introduced in 1988. These reforms have had, and continue to have, significant economic consequences. However, the concept of capital adequacy and its usefulness in bank regulation has attracted a significant amount of criticism from the academic community. This raises the question as to why it was that capital adequacy was adopted as a tool for international bank regulation, despite major concerns with its rationale and effectiveness. Although the topic of capital adequacy has attracted an increasing body of research, the reasons behind the adoption and implementation of capital adequacy by international bank regulators have remained unexamined in the literature. This paper investigates the rationale for capital adequacy, citing documentary and interview evidence surrounding the key decisions, and in the process traces the dynamics of international bank regulation. The principal finding is that regulatory reform was influenced by tradition, convenience and likely acceptability rather than by any serious considerations of regulatory objectives and potential effectiveness of the capital adequacy reforms. This corresponds to findings about the origin and dynamics of regulation in the political economy literature.

Following the recent global financial crisis, US regulatory agencies issued laws to implement the Basel III accords to ensure the resiliency of the US banking sector. Theories predict that enhanced regulations may alter credit issuance of the regulated banks due to increased capital requirements, but the direction of changes might not be straightforward especially with respect to the agricultural loans. A decrease in credit availability from banks might pose a serious problem for farmers who rely on bank credit especially during economic recessions. The paper aims to discuss these issues.

In this study, the impact of Basel III regulatory framework implementation on agricultural lending in the USA is examined. Using panel data of FDIC-insured banks from 2008 to 2017, the agricultural loan volume and growth rates are examined for agricultural banks and all US banks.

The results show that agricultural loan growth rates have slowed down, but the amount of agricultural loan volume issuance still remained positive. More detailed examination finds that regulated agricultural banks have decreased both the agricultural loan volume and their loan exposure to the agricultural sector, showing a possible sign of credit crunch.

This study examines whether the implementation of the Basel III regulation has resulted in changes in agricultural loan issuance by US banks as predicted by the lending channel theory.

The purpose of this study is to replicate Avery and Berger’s (1991) analysis using data from 2001 through 2011. Although risk-based capital (RBC) regulation is a key component of US banking regulation, empirical evidence of the effectiveness of these regulations has been mixed. Among the first studies of RBC regulation, Avery and Berger (1991) provide evidence from data on US banks that new RBC regulations outperformed old capital regulations from 1982 through 1989.

Using data from the Federal Reserve’s Call Reports, the authors compare banks’ capital ratios and RBC ratios to five measures of bank performance: income, standard deviation of income, non-performing loans, loan charge-offs and probability of failure.

Consistent with Avery and Berger (1991), the authors find banks’ risk-weighted assets to be significant predictors of their future performance and that RBC ratios outperform regular capital ratios as predictors of risk.

The study improves on Avery and Berger (1991) by using an updated data set from 2001 through 2011. The authors also discuss some potential limitations of this method of analysis.

As financial markets across the world become more integrated, the potential for financial shocks to be transmitted both from one jurisdiction to another and from one financial sector to another increases. At the same time differences in national regulatory arrangements can be the source of important competitive distortions between financial institutions. Against this background national authorities have been seeking to coordinate the regulation of securities firms and of banks undertaking securities business. This paper, which is published in two parts, aims to clarify some of the policy issues arising from recent convergence initiatives by examining the US capital adequacy rules for US investment firms and contrasting the US approach with European securities regulation as formulated in the Capital Adequacy Directive. The second part of this paper will be published in the next issue of Journal of Financial Regulation & Compliance.