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To raise the quality of regulatory capital, Basel III capital rules recognize unrealized gains and losses on all available-for-sale (AFS) securities in Common Equity Tier 1 Capital (CET1). However, by examining the correlations between U.S. GDP growth rate, interest rates and regulatory capital ratios computed using Basel III regulatory capital definition for six U.S. global systemically important banks (G-SIBs) since 2007, this chapter finds that Basel III regulatory capital will enhance the pro-cyclicality of Basel III leverage ratio and Tier 1 capital ratio and their sensitivity to long-term interest rates. Therefore, Basel III capital standards may have significant implications for bank supervision and bank capital risk management in the near future. As banks will hold more high-quality liquid assets (HQLAs) as required by Basel III Liquidity Coverage Ratio (LCR), the weight of unrealized gains and losses arising from fair value accounting will increase in Basel III Tier 1 capital base, the consequent increase of pro-cyclicality in a bank’s regulatory capital ratios may distort the true picture of bank capital adequacy. If an expected loss approach (EL) is used as the provisioning model, such capital risk may be increased further. Moreover, as U.S. monetary policy has started tapering quantitative easing, long-term interest rates will increase inevitably. This may increase the negative impact of unrealized gains and losses on AFS securities on bank capital. As a result, it may be difficult for banks to maintain appropriate capital ratios to meet regulatory requirements and support business activities.

The world has been gripped by the severest global financial (and economic) crisis since the Great Depression of the 1930s. How did it come about, what is being done to alleviate its consequences and, vitally, what measures should be undertaken to ensure against its recurrence are therefore questions that must be satisfactorily addressed. Preventing ‘financial crises’ from ever happening again is of course completely out of the question, they being inherent to the economic system as we understand it; rather that of those of the ‘severest’ kind. Fortunately, a vast literature has been accumulating on these issues, so the intention here is not to add to it and reinforce the perception that economists will offer more opinions on a single issue than the total membership of any assembled group thereof for the purpose. Hence, this is confined to a consideration of the most convincing explanations. Owing to space limitations, I shall not examine the recommendations for future action in all the mentioned areas but will do so for what is being offered to cater for the capital adequacy and pro-cyclicality since they are of the essence and involve many players.

The purpose of this study is to review a synthesis of International Financial Reporting Standards (IFRS) implementation in developing countries in an attempt to provide directions for future research. The in-depth analysis was performed with the use of the data analysis tool available in the Scopus databases. The study initially reviewed 145 papers and in particular 35 papers were analysed. Fifteen articles (43%) were published in seven journals including International Journal of Accounting, Critical Perspectives on Accounting, Advances in Accounting, International Journal of Accounting and Information Management, Asian Review of Accounting, Journal of Applied Accounting Research, and Asian Journal of Business and Accounting. Specifically, 89% citations were from 14 articles, but 9 (25%) articles were without any citations. Most of the studies focus on qualitative followed by quantitative, and very few studies were based on mixed methods. Researchers should focus on few areas for future research on IFRS implementation in developing countries including theory implications, policy prescriptions, and case of particular standard.

Inquiring into the role of Islamic and conventional banks regarding the core responsibility of lending is an established phenomenon. This chapter is based on key findings regarding dynamic changes in the structural mix of credit portfolios in Islamic banks and conventional banks of Pakistan.

The nature of the study is exploratory; the sample consists of 5 Islamic banks and 20 conventional banks of Pakistan comparatively evaluated for the time frame of 2008–2014.

Our findings show that for Islamic banks, there is an increasing trend in the credit portfolios as a proportion to assets as well as to equity, whereas in case of conventional banks the findings are opposite. The results further prove a positive and negative growth of credit portfolios as proportional to assets and equity in case of Islamic and conventional banks respectively. It is also observed that credit portfolios of Islamic banks are growing with higher degree as a proportion to equity as compared to proportion to assets. On the other hand, conventional banks show higher degree of decline of credit portfolios as a proportion to equity as compared to assets.

These findings also show that primary stakeholders in Islamic banks are more risk seekers thus more inclined towards risky investments than ordinary credits.

A proposed explanation for why business creation is often found to increase in recessions is that there are two components to entrepreneurship – “opportunity” and “necessity” – the latter of which is mostly counter-cyclical. Although there is some agreement on the conceptual distinction between these two factors driving entrepreneurship, there is little consensus in the literature on empirical definitions. The goal of this chapter is to propose an operational definition of opportunity versus necessity entrepreneurship based on the entrepreneur's prior work status (i.e., based on previous unemployment) that is straightforward, based on objective information, and empirically feasible using many large, nationally representative datasets. We then explore the validity of the definitions with theory and empirical evidence. Using datasets from the United States and Germany, we find that 80–90% of entrepreneurs are opportunity entrepreneurs. Applying our proposed definitions, we document that opportunity entrepreneurship is generally pro-cyclical and necessity entrepreneurship is strongly counter-cyclical both at the national levels and across local economic conditions. We also find that opportunity vs necessity entrepreneurship is associated with the creation of more growth-oriented businesses. The operational definitions of opportunity and necessity entrepreneurship proposed here may be useful for distinguishing between the two types of entrepreneurship in future research.

Purpose – This chapter draws on several areas of scholarship to consider the impact of economic crises on the utility of economic costly signalling theory (ECST).

Design/methodology/approach – The chapter introduces the problem of economic crises into the debate over ECST to better understand its practical utility. It first highlights the pacific benefits anticipated by ECST to provide a conceptual baseline. It then reviews contemporary economic and political science literature that links economic integration, economic crises and external conflict. Finally, it introduces a perspective on how the conditions created by economic crises reduce the ability and willingness of states to send economic costly signals.

Findings – The chapter finds that the value of ECST to security policy is problematic when considering the occurrence of economic crises.

Originality/value – This chapter advances the debate over capitalist peace theory by introducing the problem of economic crises to the discourse.

The Eurozone debt crisis has indeed jeopardized the recovery plans put in place post global crisis by regulators, policymakers, and the sovereigns. Though the crisis is epicentered in the Eurozone, the knock-on effects of the crisis are felt all across the globe. The emerging and developing economies (EDEs) are also expected to post lower growth on account of worsening external environment and a weakening internal demand. This chapter analyzes the causes for sovereign debt crisis, presents the implications of sovereign debt crises, and draws lessons for banking sectors more particularly in the context of emerging markets like that of India.

Financial markets have experienced considerable turbulence over the past two decades. The recent subprime and sovereign debt crises in the United States and Europe, respectively, have resulted in significant new regulatory responses. They also prompted the re-evaluation of how best to manage and measure financial risk. The 20 chapters in this volume provide a number of different perspectives on financial risk in the post-crisis period where monetary easing has become a predominant monetary policy. While asset price volatility has now returned to levels experienced in the mid-2000s many lessons remain. Among the most important is the need to accurately measure and manage the complex risks that exist in financial markets. Our hope is that the chapters presented here provide a better understanding of how best to do this, while also giving insights for next suitable steps and further developments.