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The purpose of this paper is to focus on the “Basel Illusion”, the belief that a model-driven quantitative approach to capital adequacy can lead to a more robust and shock-proof system. The author analyzes the Basel framework and its role as a major source of systemic risk. Furthermore, the Basel framework is unlikely to enhance the safety of the financial system and prevent future crises. As such, Basel should be scrapped and regulators should revert to a simple tangible common equity (TCE) leverage rule.

The paper aims to review the extensive existing literature and analytic approach to the problem, trying to answer the question: why Basel? The paper looks at the Basel methodology of calculating risk-weighed assets.

The paper looks at the basic reasons underlying the Basel failure: complexity, variations in measurement of risk-weighed assets across banking institutions, ability to game the system and amplification of systemic risk. The research concludes that a simple TCE leverage rule is superior to Basel in controlling systemic risk.

Further research will be needed in determining the “optimal” level of capital.

Regulators and bankers should seek simplicity in capital rules. The dubious use of quantitative models can only lead to spurious precision.

This article synthesizes an extensive body of work on the issue of bank capital to demonstrate the superiority of a simple capital rule.

Financial globalization and global imbalances are two facets of the same phenomenon, which has resulted in the worst global economic and financial crisis since the Great Depression. The purpose of this paper is to analyze the complex interaction of several mutually reinforcing trends and factors – the global monetary easing of 2001‐2004, financial innovation, regulatory failure, in particular in the USA and the UK, US fiscal indiscipline and Chinese currency manipulation – that contributed to the global financial crisis. The key to a return to global financial buoyancy will be the coordinated resolution of the global imbalances over the medium term, as well as the establishment of a strong global financial regulatory framework focusing on both macro‐ and micro‐financial risks.

In the paper, the author analyzes the role of the interaction of financial innovation, regulatory and global imbalances in the creation of the real estate bubble, shadow banking and the eventual collpase of what the author dubbed the Banking 2.0 structure (1980s).

The main findings are that these factors contributed to a flattening of the yield curve in 2004‐2006 despite the tightening of monetary policy and growing US fiscal deficits. Moreover, while the US dollar is on a long‐term weakening trend, the lack of alternatives means that it will maintain its role as a reserve currency.

This paper focuses on the role of the global imbalances in triggering the financial crisis and shaping the role of the dollar in the post‐crisis world.

The purpose of this paper is to propose an object-oriented model of financial simulations which aims to test the applicability and suitability of the proposed measures of Basel III with respect to the prevention of banking crises.

The authors introduce an object-oriented model of financial simulations in the banking sector, namely, virtual banking (VBanking). The system is based on behavioural simulation of economic agents and allows for transactions between them, using various forms of financial assets. VBanking has been implemented as an automated stand-alone model, allowing for repetitive simulations under the same parameter sets, producing an efficient series of statistical data.

Interpretation of the resulting data suggests that some of the criticism against the proposed measures is justified, as neither economic crises nor contagion are diminished under Basel III. At the same time, the authors’ findings support that the stability goal is met, at least in part.

The model encompasses a relatively small part of the banking sector, while the authors choose not to deal with the production part of the economy. However, these limitations do not hinder the validity and importance of the authors’ findings.

The originality of this article lies in the use of an object-oriented behavioural model and in the resulting model application that is based on it. This enables the authors to run a series of simulations with different parameters, the results of which the authors can then compare. The authors’ findings can contribute to the authorities’ efforts to ameliorate the policies of Basel III.

The purpose of this paper is to present a numerical investigation of the transient two-dimensional natural convective boundary-layer flow of a nanofluid past an isothermal vertical plate by incorporating the effects of Brownian motion and thermophoresis in the mathematical model.

The problem is formulated using the Oberbeck–Boussinesq and the standard boundary-layer approximations. The governing coupled non-linear partial differential equations for conservation of mass, momentum, thermal energy and nanoparticle volume fraction have been solved by using an efficient implicit finite-difference scheme of the Crank–Nicolson type, which is stable and convergent. Numerical computations are performed and the results for velocity, temperature and nanoparticle volume fraction are presented in graphs at different values of system parameters such as Brownian motion parameter, thermophoresis parameter, buoyancy ratio parameter, Prandtl number, Lewis number and dimensionless time. The results for local and average skin-friction and Nusselt number are also presented graphically and discussed thoroughly.

It is found that the velocity, temperature and nanoparticle volume fraction profiles enhance with respect to time and attain steady-state values as time progresses. The local Nusselt number is found to decrease with increasing thermophoresis parameter, while it increases slightly with increasing Brownian motion parameter. To validate the present numerical results, the steady-state local Nusselt number results for the limiting case of a regular fluid have been compared with the existing well-known results at different Prandtl numbers, and the results are found to be in an excellent agreement.

The present analysis is limited to the transient laminar natural convection flow of a nanofluid past an isothermal semi-infinite vertical plate in the absence of viscous dissipation and thermal radiation. The unsteady natural convection flow of a nanofluid will be investigated for various physical conditions in a future work.

Unsteady flow devices offer potential performance improvements as compared with their steady-state counterparts, and the flow fields in the unsteady flow devices are typically transient in nature. The present study provides very useful information for heat transfer engineers to understand the heat transfer enhancement with the nanofluid flows. The present results have immediate relevance in cooling technologies.

The present research work is relatively original and illustrates the transient nature of the natural convective nanofluid boundary-layer flow in the presence of Brownian motion and thermophoresis.