Monetary and Banking Research Institution
Date:7/25/2018 8:47:53 AM   |   Code : 293789
A policy paper on “An Analysis of the Factors Affecting the Banking Sector's Capital Buffer Decision” published by the MBRI
A policy paper on “An Analysis of the Factors Affecting the Banking Sector's Capital Buffer Decision” published by the MBRI
 
According to the Public Relations department of the Monetary and Banking Research Institute (MBRI), Zahra Khoshnoud and Marzieh Esfandiari organized in the abstract of the policy paper that developing special strategies for achieving stability and healthiness in the banking sector to prevent the spillover effects of banking crises to other sectors of the financial system has been emphasized in countries with bank-based financial system. However, regarding the high level of complexities and interconnectedness in the different sectors of financial systems, the necessity of soundness and healthiness of banking sector even in the market-based financial systems has been highly important.

The authors also emphasized that developing Basel I capital accord and the overall agreement of internationally active banks of G10 countries to the minimum capital adequacy ratio of 8% in 1988 following the international debt crisis of the late 1970's that ended up in the bankruptcy of some large international banks is considered as one of the aforementioned strategies that has been applied internationally not only in the internationally active banks of G10, but also has been promoted to the one of the basic indicators of financial healthiness of banks in national level even in the less developed countries.

Nevertheless as a bank-based country, Iran, this strategy has also been implemented in 2003 by three circulars in calculating capital adequacy ratio based on Basel I. However, the non-strictness of this strategy by means of not forcing any low-capital bank to declare its action plan for promoting its capital level and not performing any strict supervisory plans for them has ended up in some cases to the low and even the non-declaration of capital adequacy ratio for years.

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