Adoption of Basel norms: a review of empirical evidences
| Pages | 271-284 |
| DOI | https://doi.org/10.1108/JFRC-02-2014-0010 |
| Published date | 13 July 2015 |
| Date | 13 July 2015 |
| Author | Mandeep Kaur,Samriti Kapoor |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
Adoption of Basel norms: a
review of empirical evidences
Mandeep Kaur and Samriti Kapoor
Department of Commerce, Guru Nanak Dev University, Amritsar, India
Abstract
Purpose – The purpose of this paper is to examine diverse literature available worldwide on the Basel
norms readiness and risk management by thoroughly analyzing the empirical studies of past 13 years,
i.e. from 2001 to 2013.
Design/methodology/approach – A qualitative approach has been used to analyze and compare the
main ndings as well as applicability of the research papers. Hence, by using an interpretive and critical
approach through content analysis of the studies reviewed, the important measures, i.e. objectives,
research methodology, sample size, respondents’ prole and signicant ndings, have been reported.
Findings – The study attempted to understand the trend of various research aspects prevailing in the
eld of banking industry related to the implementation of Basel norms. The content analysis of the
reviewed studies demonstrated varied level of preparedness of banks in different countries, at different
periods with regard to Basel norms. However, over time, awareness and compliance with Basel norms
have increased in almost every part of the world. These studies also highlighted the benets of Basel
norm compliance by banks, such as more proactive portfolio management, forward-looking risk
management, improved operational efciency and better risk appetite. Further, data acquisition, data
reporting, lack of prerequisite human resources, training and education, scarce resources and disclosure
requirements were reported to be major challenges by most of the studies.
Originality/value – As there are relatively few studies providing a comprehensive review of
literature in this area, this study builds up a strong conceptual framework for the researchers by
examining the vast literature on Basel norms and risk management in banks.
Keywords Review, Risk management, Basel norms, Readiness
Paper type Literature review
1. Introduction
Banks have always played a prominent role in the nancial sector of every economy.
They are the most important nancial intermediaries and their activities have an impact
on each sector of the economy. So, the stability of the international banking system has
emerged as a key concern for regulators in the rapidly changing global banking
scenario. Basel Committee on Banking Supervision introduced Basel I in 1988 with a
view to protect banking soundness and stability. The Basel Accord was signed by the
G10 countries and was intended to apply only to internationally active banks, but it was
adopted by more than 100 nations. Although these standards were not legally binding,
yet they have made a substantial impact on banking supervision and bank capital
regulation. But, Basel I comprised some rigidities, like it lacked discrimination between
different categories of risk. So, it was replaced in 2004 by a more risk-sensitive accord
having three “mutually reinforcing pillars” known as Basel II. This revised set of
international standard required banks to maintain a minimum level of capital, to ensure
that they can meet their obligations, cover unexpected losses and promote public
condence. Basel II capitalized on the modern risk management techniques and
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Adoption of
Basel norms
271
Journalof Financial Regulation
andCompliance
Vol.23 No. 3, 2015
pp.271-284
©Emerald Group Publishing Limited
1358-1988
DOI 10.1108/JFRC-02-2014-0010
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