The Impact of the Adherence to Basel Rules on Banking Risk Management: Jordan Kuwait Bank Case Study

  • Abdul Razzak Al-Chahadah
  • Maha Ayoush
Conference paper
Part of the Lecture Notes in Mechanical Engineering book series (LNME)


It is essential for the financial institutions to have adequate capital in order to meet their obligations and to absorb unexpected losses. Therefore, this study aims to demonstrate the impact of the Basel rules on risk management in Jordanian banks, and how to approach a standard of capital adequacy approved by the Basel Committee on Bank Supervision (BCBS). A case study is conducted using the Jordan Kuwait Bank in order to achieve the purposes of the study. The financial statements of the bank covering the years 2011–2015 are examined to check its commitment in implementing the Basel rules and the impact on the banking risk management and continuity of the bank’s future activities. The study concluded a number of results. The most important one is the commitment by the Jordan Kuwait Bank in applying the Basel rules II on Bank Supervision and the ability to achieve the required rate of adequacy of capital money, which exceeded the prescribed percentage (8%) over the five years of study. This reflects the presence of strong capital adequacy that is able to support the continuity of the bank and absorb any unexpected losses or shocks, and thus the efficiency of banking risk management. One of the main recommendations of the study is the need for a decision by the Central Bank of Jordan to strongly encourage Jordanian banks to apply the requirements of Basel III in order to enhance banking risk management, and to increase foreign banks’ confidence in dealing with them.


Banking Basel rules Capital adequacy Risk management 


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© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Al-Zaytoonah University of JordanAmmanJordan

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