Skip to content

Banking sectors that bounce back

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

In 2007, the banking sector collapsed.  Today, several banks are still struggling to stand on their own two feet. To help shore them up against recurrent catastrophic collapse, the world’s top Group of Twenty economies has proposed a new set of regulations called the Basel III regulatory framework. Local analysis of this framework hints that while beneficial, it would not prevent another bust.

Governments needed to bail out banks in 2007 because banks could not pay back their loans. Banks must make sure that they maintain a ratio of capital (some form of money ranging from property to shares) to the amount of money they lend, called capital ratio. The minimum currently stands at 4% (Tier 1), meaning that banks only need to hold less than one in twenty of the money they are lending, which does not leave much of a ‘cushion’ if things go wrong. A bank’s liquidity can quickly dry up damaging other banks.

The Basel III framework introduces a new set of standards that amongst other things raises the minimum Tier 1 capital ratio to 6%.  Marica Bonavia (under the supervision of Mr Michel Said) assessed the impact of the new framework on the American and European banking systems. Her work reveals how the largest American banks already conform. On the other hand, the position of European banks ranges from German banks that are raising new capital, to Swiss and British regulators who want higher capital ratios.

The dissertation suggests that the real impact of Basel III still needs to be seen and although the new regulations are a big step forward, further efforts are needed.

This research was performed as part of a Bachelor of Commerce (Honours) from the Faculty of Economics, Management and
Accountancy. 

More to explorer

Maltese Innovation Promises New Era in Accessing Space

A team of researchers and engineers from the University of Malta’s Astrionics Research Group (ASTREA) are developing their own satellite and ground station for Malta to take its place in the night sky above.

Cutting EDGE Research: the Genomes of Maltese Plants

Conservation is a 21st century hot topic. It is a top priority worldwide to ensure the lasting protection of the planet and its natural resources. But how can we even begin to conserve our natural environment if we don’t understand it? Ines Ventura investigates.

Impressions on Branding

Our impression of a brand shapes our experience of the product or service involved. Five students from the Bachelor of Fine Arts (BFA) in Digital Arts looked into this, involving their own interests in the medium.

No comment yet, add your voice below!


Add a Comment

Your email address will not be published.