Basel III requirements to banks’ capital and liquidity

Natalia  Konovalova

Published : 2016-06-14

Vol. 4 No. 2 (2016)

Basel III requirements to banks’ capital and liquidity

Natalia Konovalova

Abstract

Bank capital adequacyand liquidity are always topical problem in the international banking system because Basel Committee constantly updates require-ments for capital adequacy assessment and liquidity management to commercial banks. The present research focuses on the analysis of bank capital and bank liquid-ity. Therefore the goal of the paper is determination of bank capital adequacy level and assessment of financial strength of capital in Latvian commercial banks, as well as evaluation of liquidity position according to Basel III requirements. Research methods include: empirical analysis, comparative method, classification and gen-eralization methods, cumulative analysis, as well as evaluation of capital adequacy and liquidity through quantitative change ratios. The main results and position of Latvian commercial banks according to Basel III include the following findings: – weak banks will be driven out of the financial market, – there will be a shift of demand from short term to long term financing,– the risk of bankruptcy of banks will decrease,– toughening of requirements to the capital and liquidity will lead to the reduc-tion of crediting and recession of bank activity.

Keywords:

capital adequacy, risk weighted assets, conservation buffer, liquidity coverage ratio, net stable funding ratio

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Konovalova, N. . (2016). Basel III requirements to banks’ capital and liquidity. Forum Scientiae Oeconomia, 4(2), 27–36. Retrieved from https://ojs.wsb.edu.pl/index.php/fso/article/view/223

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