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A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital adequacy ratio of equity as a percentage of risk-weighted assets.
The number of enterprises is small, entry and exit from the market are restricted, product attributes are different, and the demand curve is downward sloping and relatively inelastic. Oligopolies are usually found in industries in which initial capital requirements are high and existing companies have strong foothold in market share. Monopoly:
Institutions were allowed to choose between the initial basic indicator approach, which increases the minimum capital requirement in Basel I approach from 8% to 15% and the standardised approach, which evaluates the business lines as a medium sophistication approaches of the new framework.
The Federal Reserve Friday announced it will extend the comment period for proposed higher bank capital requirements in the wake of banks' complaints the requirements would hurt lending.
Thus the actual capital requirement is between 11 and 13.5% (including Capital Conservation Buffer and Counter Cyclical Buffer). [ 14 ] In response to a questionnaire released by the Financial Stability Institute (FSI), 95 national regulators indicated they were to implement Basel II, in some form or another, by 2015.
This article details the mechanics of the valuation, via a worked example; it also discusses modifications typical for startups, private equity and venture capital, corporate finance "projects", and mergers and acquisitions, and for sector-specific valuations in financial services and mining.
The Federal Reserve unveiled that it's planning to scale back a proposal to raise capital requirements for banks after politicians and the banking industry pushed back on the initial plan, warning ...
In many countries this is the only approach regulators approved in the initial phase of Basel II implementation. The Basel II accord proposes to permit banks a choice between two broad methodologies for calculating their capital requirements for credit risk. The other alternative is based on internal ratings.