The DOI matches its Crossref record.
Risk in Banking and Capital Regulation
Abstract
This paper investigates the role of bank capital regulation in risk control. It is known that banks choose portfolios of higher risk because of inefficiently priced deposit insurance. Bank capital regulation is a way to redress this bias toward risk. Utilizing the mean‐variance model, the following results are shown: (a) the use of simple capital ratios in regulation is an ineffective means to bound the insolvency risk of banks; (b) as a solution to problems of the capital ratio regulation, the “theoretically correct” risk weights under the risk‐based capital plan are explicitly derived; and (c) the “theoretically correct” risk weights are restrictions on asset composition, which alters the optimal portfolio choice of banking firms.
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Citations
Cited by
Novotny-Farkas, Z. (2016) · Accounting in Europe · doi:10.1080/17449480.2016.1210180 · Cited by 229
Bank Capital Redux: Solvency, Liquidity, and Crisis
Jordà, Ò., Richter, B., Schularick, M., & Taylor, A. (2017) · doi:10.3386/w23287 · Cited by 64
Metadata
- Authors
- KIM, D., & SANTOMERO, A. M.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1988-12
- Volume
- 43
- Issue
- 5
- Pages
- 1219-1233
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2157722270
- Cited by
- 1,055
- References
- 0
- FWCI
- 24.42
- Type
- journal article
- Language
- en
- Open access
- closed
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- CoChat. (2026). Citation check: Risk in Banking and Capital Regulation. https://app.cochat.ai/papers/10.1111/j.1540-6261.1988.tb03966.x
- The paper
- KIM, D., & SANTOMERO, A. M. (1988). Risk in Banking and Capital Regulation. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.1988.tb03966.x
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
