Overview of the Basel Capital Adequacy Framework

Orobah Ali Barghouthi; Mohammed Bayyoud

doi:doi:10.11648/j.ijfbr.20160203.15

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Overview of the Basel Capital Adequacy Framework

Orobah Ali Barghouthi, Mohammed Bayyoud

Received: 23 January 2016 Accepted: 17 May 2016 Published: 30 June 2016

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Abstract

This paper examines Capital Adequacy Framework that specifies the approaches for quantifying the Risk-Weighted Assets (RWA) for credit risk, market risk and operational risk. The computation of the risk-weighted assets is consistent with Pillar 1 requirements set out by the Basel Committee on Banking Supervision (BCBS) and the Islamic Financial Services Board (IFSB) in their respective documents - “International Convergence of Capital Measurement and Capital Standards: A Revised Framework” issued in June 2006 and the “Capital Adequacy Standard (CAS)” issued in December 2005. While the Bank believes that such customization could be justified, a pragmatic approach is adopted for implementation. Higher prudential requirements and risk management standards would be introduced gradually taking into consideration industry feedback during the consultation process.

DOI	10.11648/j.ijfbr.20160203.15
Published in	International Journal of Finance and Banking Research (Volume 2, Issue 3, June 2016)
Page(s)	102-115
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Basel Agreement, Capital Adequacy, Pillars 1

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[3]	“Estimating the trend of M3 income velocity underlying the reference value for monetary growth” by C. Brand, D. Gerdesmeier and B. Roffia, May 2002.
[4]	“Labour force developments in the euro area since the 1980s” by V. Genre and R. Gómez-Salvador, July 2002.
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[6]	“Banking integration in the euro area” by I. Cabral, F. Dierick and J. Vesala,December 2002.
[7]	“Economic relations with regions neighbouring the euro area in the ‘Euro Time Zone’” byF. Mazzaferro, A. Mehl, M. Sturm, C. Thimann and A. Winkler, December 2002.
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[10]	“The acceding countries’ strategies towards ERM II and the adoption of the euro:an analytical review” by a staff team led by P. Backé and C. Thimann and includingO. Arratibel, O. Calvo-Gonzalez, A. Mehl and C. Nerlich, February 2004.

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APA Style

Orobah Ali Barghouthi, Mohammed Bayyoud. (2016). Overview of the Basel Capital Adequacy Framework. International Journal of Finance and Banking Research, 2(3), 102-115. https://doi.org/10.11648/j.ijfbr.20160203.15

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ACS Style

Orobah Ali Barghouthi; Mohammed Bayyoud. Overview of the Basel Capital Adequacy Framework. Int. J. Finance Bank. Res. 2016, 2(3), 102-115. doi: 10.11648/j.ijfbr.20160203.15

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AMA Style

Orobah Ali Barghouthi, Mohammed Bayyoud. Overview of the Basel Capital Adequacy Framework. Int J Finance Bank Res. 2016;2(3):102-115. doi: 10.11648/j.ijfbr.20160203.15

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@article{10.11648/j.ijfbr.20160203.15,
  author = {Orobah Ali Barghouthi and Mohammed Bayyoud},
  title = {Overview of the Basel Capital Adequacy Framework},
  journal = {International Journal of Finance and Banking Research},
  volume = {2},
  number = {3},
  pages = {102-115},
  doi = {10.11648/j.ijfbr.20160203.15},
  url = {https://doi.org/10.11648/j.ijfbr.20160203.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20160203.15},
  abstract = {This paper examines Capital Adequacy Framework that specifies the approaches for quantifying the Risk-Weighted Assets (RWA) for credit risk, market risk and operational risk. The computation of the risk-weighted assets is consistent with Pillar 1 requirements set out by the Basel Committee on Banking Supervision (BCBS) and the Islamic Financial Services Board (IFSB) in their respective documents - “International Convergence of Capital Measurement and Capital Standards: A Revised Framework” issued in June 2006 and the “Capital Adequacy Standard (CAS)” issued in December 2005. While the Bank believes that such customization could be justified, a pragmatic approach is adopted for implementation. Higher prudential requirements and risk management standards would be introduced gradually taking into consideration industry feedback during the consultation process.},
 year = {2016}
}

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TY  - JOUR
T1  - Overview of the Basel Capital Adequacy Framework
AU  - Orobah Ali Barghouthi
AU  - Mohammed Bayyoud
Y1  - 2016/06/30
PY  - 2016
N1  - https://doi.org/10.11648/j.ijfbr.20160203.15
DO  - 10.11648/j.ijfbr.20160203.15
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 102
EP  - 115
PB  - Science Publishing Group
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AB  - This paper examines Capital Adequacy Framework that specifies the approaches for quantifying the Risk-Weighted Assets (RWA) for credit risk, market risk and operational risk. The computation of the risk-weighted assets is consistent with Pillar 1 requirements set out by the Basel Committee on Banking Supervision (BCBS) and the Islamic Financial Services Board (IFSB) in their respective documents - “International Convergence of Capital Measurement and Capital Standards: A Revised Framework” issued in June 2006 and the “Capital Adequacy Standard (CAS)” issued in December 2005. While the Bank believes that such customization could be justified, a pragmatic approach is adopted for implementation. Higher prudential requirements and risk management standards would be introduced gradually taking into consideration industry feedback during the consultation process.
VL  - 2
IS  - 3
ER  -

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Author Information

Orobah Ali Barghouthi

Faculty of Business and Economics, Department of Banking & Finance, Alquds University, Abu Dis, Palestine
Mohammed Bayyoud

Faculty of Business and Economics, Department of Banking & Finance, Alquds University, Abu Dis, Palestine

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APA Style

Orobah Ali Barghouthi, Mohammed Bayyoud. (2016). Overview of the Basel Capital Adequacy Framework. International Journal of Finance and Banking Research, 2(3), 102-115. https://doi.org/10.11648/j.ijfbr.20160203.15

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ACS Style

Orobah Ali Barghouthi; Mohammed Bayyoud. Overview of the Basel Capital Adequacy Framework. Int. J. Finance Bank. Res. 2016, 2(3), 102-115. doi: 10.11648/j.ijfbr.20160203.15

Copy | Download

AMA Style

Orobah Ali Barghouthi, Mohammed Bayyoud. Overview of the Basel Capital Adequacy Framework. Int J Finance Bank Res. 2016;2(3):102-115. doi: 10.11648/j.ijfbr.20160203.15

Copy | Download

@article{10.11648/j.ijfbr.20160203.15,
  author = {Orobah Ali Barghouthi and Mohammed Bayyoud},
  title = {Overview of the Basel Capital Adequacy Framework},
  journal = {International Journal of Finance and Banking Research},
  volume = {2},
  number = {3},
  pages = {102-115},
  doi = {10.11648/j.ijfbr.20160203.15},
  url = {https://doi.org/10.11648/j.ijfbr.20160203.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20160203.15},
  abstract = {This paper examines Capital Adequacy Framework that specifies the approaches for quantifying the Risk-Weighted Assets (RWA) for credit risk, market risk and operational risk. The computation of the risk-weighted assets is consistent with Pillar 1 requirements set out by the Basel Committee on Banking Supervision (BCBS) and the Islamic Financial Services Board (IFSB) in their respective documents - “International Convergence of Capital Measurement and Capital Standards: A Revised Framework” issued in June 2006 and the “Capital Adequacy Standard (CAS)” issued in December 2005. While the Bank believes that such customization could be justified, a pragmatic approach is adopted for implementation. Higher prudential requirements and risk management standards would be introduced gradually taking into consideration industry feedback during the consultation process.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - Overview of the Basel Capital Adequacy Framework
AU  - Orobah Ali Barghouthi
AU  - Mohammed Bayyoud
Y1  - 2016/06/30
PY  - 2016
N1  - https://doi.org/10.11648/j.ijfbr.20160203.15
DO  - 10.11648/j.ijfbr.20160203.15
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 102
EP  - 115
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20160203.15
AB  - This paper examines Capital Adequacy Framework that specifies the approaches for quantifying the Risk-Weighted Assets (RWA) for credit risk, market risk and operational risk. The computation of the risk-weighted assets is consistent with Pillar 1 requirements set out by the Basel Committee on Banking Supervision (BCBS) and the Islamic Financial Services Board (IFSB) in their respective documents - “International Convergence of Capital Measurement and Capital Standards: A Revised Framework” issued in June 2006 and the “Capital Adequacy Standard (CAS)” issued in December 2005. While the Bank believes that such customization could be justified, a pragmatic approach is adopted for implementation. Higher prudential requirements and risk management standards would be introduced gradually taking into consideration industry feedback during the consultation process.
VL  - 2
IS  - 3
ER  -

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