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Basel Accord Associated Institutions in Bangladesh

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Abstract

In Chapter 2, we have discussed that how BIS has adopted Basel Accord as a capital regulation for internationally active banks. The acceptance of Basel Accord by G 10 countries made it as an acceptable prudential regulation by the central banks around the globe and adopted it taking into consideration of local context. Following this trend, Bangladesh Bank (BB) has adopted Basel Accord in a customized way considering the country’s banking sector context and initiated several institutions to implement the Basel Accord. As the study emphasizes on the discussion on Basel Accord with reference to Bangladesh, we focus on those institutions in depth and analyze the key features of all institutions. Readers might recall that we hypothesized in Chapter 1 that homogenization of credit risk screening under standardized approach (SA) fails to capture the real credit risk in case of Bangladesh. To discuss on this issue in depth, we will critically analyze the regulations related with SA from an institutional perspective in this chapter. In addition, we analyze how credit risk quantification is conducted in the Basel framework and how the homogenization of credit risk screening works in Bangladesh, as well as the institutional cost/transaction cost involved in the issuance of sub-debt. Before moving to our core discussion, we reviewed neo-institutional economists’ views on the role of regulations. The outline of this chapter is as follows. Section 4.2 analyzes the institutional economists view on regulations. Section 4.3 presents the brief discussions on credit risk quantification approaches under Basel Framework. Section 4.4 reviews the institutions of ECAI in Bangladesh from institutional perspectives. Sub-debt-related institutions are discussed in Sect. 4.5. Section 4.6 is concluding remarks.

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Fig. 4.1
Fig. 4.2

Notes

  1. 1.

    See the full version of Basel Accord II & III guidelines and its related circulars issued by BB from time to time. https://www.bb.org.bd/mediaroom/baselii/baselII.php.

  2. 2.

    See the main text in the BSEC web portal. https://www.sec.gov.bd/home/lbook or https://www.sec.gov.bd/lbook/F-03_2015.pdf.

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Hasan, A.K.M.K., Suzuki, Y. (2021). Basel Accord Associated Institutions in Bangladesh. In: Implementation of Basel Accords in Bangladesh. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-16-3472-7_4

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  • DOI: https://doi.org/10.1007/978-981-16-3472-7_4

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