CRISIS REGULATION DEMAND

                    Mohammad Jaradat, “Bogdan Vodă” University of Cluj-Napoca
                    Marius M. Motocu, “Bogdan Vodă” University of Cluj-Napoca


ABSTRACT: This paper argues and identifies in its previous part the main hallmarks of the crisis
as too-big-to-fail institutions that took on too much risk, insolvency resulting from contagion and
counterparty risk, the lack of regulatory and supervisory integration, and the lack of efficient
resolution regimes. Then this article looks at how the Basel III proposals address these issues,
helping to reduce the chance of another crisis like the current one. The Basel III capital proposals
have some very useful elements, notably a leverage ratio, a capital buffer and the proposal to deal
with pro-cyclicality through dynamic provisioning based on expected losses. However, this article
also identifies some major concerns.

Key words: crisis, capital buffer, leverage ratio, pro-cyclicality, liquidity coverage ratio.

JEL codes: G21