Abstract
Walter Bagehot in his Lombard Street, published in 1873, wrote, “A well-run bank needs no capital. No amount of capital will rescue a badly run bank”. Unfortunately, regulators cannot easily require banks to be “well-run” in Bagehot’s sense, so banks are required to hold capital as a backstop. Capital is not a bad substitute for perfect judgment, and at least it can be defined and measured (Davies, 2011). But how much capital is necessary to support the overall risk taken by a bank?
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© 2013 Damiano Guadalupi
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Guadalupi, D. (2013). The Ever-evolving Basel Accord. In: Anolli, M., Beccalli, E., Giordani, T. (eds) Retail Credit Risk Management. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9781137006769_2
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DOI: https://doi.org/10.1057/9781137006769_2
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