Rod Hardcastle
LloydsTSB1
Introduction
This chapter will discuss the development and implementation of Basel II2 in order to examine issues in the regulation of credit risk. The chapter looks at the reasons for bank regulation, explores the growth in both the volume and complexity of regulation in recent years, and proposes three principles that could be adopted to improve the implementation of future regulatory initiatives. The minor changes rendered by Basel III for these purposes can be ignored but should be considered by a firm to the extent to which they are relevant.
Reasons for Bank Regulation
Banks are regulated because they occupy a special position in the economy. The role of banks as financial ...
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